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Question 72 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 72 Chapter 5 of +2-A
Question No.72 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

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Question 72 Chapter 5 of +2-A

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72. X and Y are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2019 was as follows:

Liabilities  Assets  
Outstanding Rent 13,000Cash 10,000
Creditors 20,000Sundry Debtos80,000 
Workmen Compensation Reserve 5,600Less : Provision for Doubtful Debts4,00076,000
Capital A/cs  Stock 20,000
X50,000 Profit and Loss A/c 4,000
Y60,0001,10,000Machinery 38,600
      
  1,48,600  1,48,600

On 1st April, 2019, they admitted Z as a partner for 1/6th share on the following terms:
(i) Z brings in 40,000 as his share of Capital but he is unable to bring any amount for Goodwill.
(ii) Claim on account of Workmen Compensation is 3,000.
(iii) To write off Bad Debts amounted to 6,000.
(iv) Creditors are to be paid 2,000 more.
(v) There being a claim against the firm for damages, liabilities to the extent of 2,000 should be created.
(vi) Outstanding rent be brought down to 11,200.
(vii) Goodwill is valued at 112 years’ purchase of the average profits of last 3 years, less 12,000. Profits for the last 3 years amounted to 10,000; 20,000 and 30,000. Pass Journal entries, prepare Partners’ Capital Accounts and opening Balance Sheet

 

The solution of Question 72 Chapter 5 of +2-A: –

 

DateParticulars
L.F.DebitCredit
 Revaluation A/cDr 2,000 
 To Provision for Doubtful Debts A/c   2,000
 (Provision on debtors increased)
cash)
    
 Revaluation A/cDr 2,000 
 To Creditors A/c   2,000
 (Creditors increased)    
 Revaluation A/cDr 2,000 
 To Claim for Damages A/c   2,000
 (Liability increased)    
 Outstanding Rent A/cDr 1,800 
 To Revaluation A/c   1,800
 (Liability decreased)    
 X’s Capital A/cDr 2,520 
 Y’s Capital A/cDr 1,680 
 To Revaluation A/c   4,200
 (Loss on revaluation transferred to Partners’ Capital A/c)    
 Workmen Compensation Reserve A/cDr 5,600 
 To Workmen Compensation Claim A/c   3,000
 To X’s Capital A/c   1,560
 To Y’s Capital A/c   1,040
 (Surplus Workmen Compensation Reserve distributed)    
 Bank A/cDr 40,000 
 To Z’s Capital A/c   40,000
 (Liability increased)    

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Partners’ Capital Account
the year ended 31st March, 2019

Parti
culars
XYC

Partic
ulars

X
Yz
To Profit & Loss A/c2,4001,600By Balance B/d50,00060,000
To Revaluation A/c2,5201,680 By Bank A/c A/c40,000
    By Workmen Compensation Reserve A/c1,5601,040
    By Z’s Current A/c1,8001,200
To Balance c/d 48,44058,96040,000    
 53,36062,24040,000 53,36062,24040,000

 

 

Balance Sheet
Liabilities
AmountAssetsAmount
Outstanding Rent 11,200Cash 50,000
Workmen Compensation Claim 3,000Stock 20,000
Creditors 22,000Machinery 38,600
Claim for Damages 2,000Z ‘s Current A/c 3,000
Capital:  Debtors80,000 
X48,440 Less : Provision for D.D6,00074,000
Y58,960    
Z40,0001,47,400   
  1,85,600  1,85,600

Working Note:-

Calculation of Goodwill

Average Profit=10,000+20,000+30,0003=60,0003
 =Rs 20,000
Goodwill=Average Profits × Number of years’ purchase
 =(20,000×1.5) – 12,000
 =30,000 – 12,000
 =Rs 18,000

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Calculation of Z’s share of goodwill

Z’s share of goodwill=18,0000X1
6
 =Rs 3,000
  

 

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

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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