# Question 70 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question No.70 Chapter No.6 - T.S. Grewal +2 Book 2019-Solution

Question 70 Chapter 6 of +2-A

70. A B and C were partners in a firm sharing profits in the ratio of 5 : 3: 2. On 31st March 2018, their Balance Sheet was as follows:

 Liabilities Amount Assets Amount Creditors 11,000 Building 20,000 Reserves 6,000 Machinery 30,000 A’s Loan A/c 5,000 Stock 10,000 Capital A/cs: Patents 11,000 A 25,000 Debtors 8,000 B 25,000 Cash 8,000 C 15,000 87,000 87,000

A died on 1st October 2018. It was agreed among his executors and the remaining partners that:
i Goodwill to be valued at 212 years’ purchase of the average profit of the previous 4 years, which were 2014-15: 13,000; 2015-16: 12,000; 2016-17: 20,000 and 2017-18: 15,000.
ii Patents be valued at 8,000; Machinery at 28,000; and Building at 25,000.
iii Profit for the year 2017-18 be taken as having accrued at the same rate as that of the previous year.
iv Interest on capital be provided @ 10% p.a.
v Half of the amount due to A to be paid immediately to the executors and the balance transferred to his Executors’ Loan Account. Prepare A’s Capital Account and A’s Executors’ Account as on 1st October 2018.

## The solution of Question 70 Chapter 6 of +2-A: –

 A’s Capital Account Particular Amount Particular Amount To Bank A/c 28,450 By Balance b/d 25,000 To A’s Executors A/c 28,450 By Reserve 3,000 By B’s Capital A/c Goodwill 11,250 By C’s Capital A/c Goodwill 7,500 By Profit & Loss Suspense 3,750 By Interest on Capital WN2 1,250 By A’s Loan A/c WN6 5,150 56,900 56,900

 A’s Executors Account Particular Amount Particular Amount To Bank A/c 28,450 By Balance b/d 56,900 To A’s Executors A/c 28,450 56,900 56,900

Working Notes:

Calculation of Share in Reserve

 = 6,000 X 5 10 = Rs 3,000

Calculation of Interest on Capital

 = 25,000 X 6 X 10 100 12 = Rs 1,250

Calculation of Profit & Loss Suspense

 Profit & loss Suspense = 15,000 X 5 X 6 100 12 = Rs 3,750

Calculation of Share in Revaluation Profit/Loss

Revaluation=Nil(−3,000−2,000+5,000)

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
• Chapter No. 3 – Goodwill: Nature and Valuation
• Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 – Admission of a Partner
• Chapter No. 6 – Retirement/Death of a Partner
• Chapter No. 7 – Dissolution of a Partnership Firm

### T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 – Financial Statements of a Company
• Chapter No. 2 – Financial Statement Analysis
• Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
• Chapter No. 4 – Accounting Ratios
• Chapter No. 5 – Cash Flow Statement

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