Question 71 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 71 Chapter 6 of +2-A

Question 71 Chapter 6 of +2-A

71. Virad, Vishad and Roma were partners in a firm sharing profits in the ratio of 5 : 3 : 2 respectively. On 31st March, 2013, their Balance Sheet was as under:

Liabilities Amount AssetsAmount
Capital A/cs:  Buildings2,00,000
Virad3,00,000 Machinery3,00,000
Vishad2,50,000 Patents1,10,000
Roma1,50,0007,00,000Stock1,00,000
Reserve Fund 60,000Debtors80,000
Creditors 1,10,000Cash80,000
  8,70,000 8,70,000

 

Virat died on 1st October 2013. It was agreed between his executors and the remaining partners that:
i Goodwill of the firm be valued at 212 years purchase of average profits for the last three years. The average profits were 1,50,000.
ii Interest on capital be provided at 10% p.a. iii Profits for 2013-14 be taken as having accrued at the same rate as that of the previous y

The solution of Question 71 Chapter 6 of +2-A: –

 

A’s Capital Account
Particular
AmountParticularAmount
To Executor’s A/c5,70,000By Balance b/d3,00,000
  By Vishad’s Capital A/c1,12,500
  By Roma’s Capital A/c75,000
   By Profit and Loss Suspense A/c 37,500
   By Reserve Fund 30,000
   By Interest on Capital 15,000
  5,70,000  5,70,000

 

 

Working Notes:

Calculation of Gaining Ratio of Vishad and Roma:

Old Ratio Virad, Vishad and Roma = 5:3:2
New Ratio Vishad and Roma = 3:2
Gaining Ratio = New Ratio – Old Ratio

 

Vishad’s Share=33
510
     
 =3  
 10  

 

Roma ’s Share=22
510
     
 =2  
 10  

Hence, gaining ratio is 3 : 2


Calculation of Virad’s Share of Goodwill:

Goodwill of the firm = Average Profit X Number of year’s purchased

 

Goodwill of Firm=1,50,000X21
2
      
 =Rs3,75,000   

 

Share of goodwill of Virad=3,75,000X5
10
     
 =Rs 1,87,500  

 

Vishad will give=1,87,500X3
5
     
 =Rs 1,12,500  

 

Roma will give=1,87,500X2
5
     
 =Rs 75,000  

 

Calculation of Profit share of Virad:

Profit for the year = Rs 1,50,000

Virad’s Share of Profit=1,50,000X5X6
1012
       
 =Rs 37,500    

Calculation of Interest on Virad ‘s Capital:

Interest on capital=3,00,000X10X6
10012
       
 =Rs 15,000    

Virad’s share of Reserve fund:

Share of Reseve Fund=60,000X5
10
     
 =Rs 30,000  

 

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)

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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2 Book 1 min - Question 71 Chapter 6 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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