Question 74 Chapter 5 of +2-A
74. A and B are partners in a firm sharing profits in the ratio of 3 : 2. They admit C as a partner on 1st April, 2019 on which date the Balance Sheet of the firm was:
| Liabilities | Assets | |||
| Capital A/cs: | Building | 50,000 | ||
| A | 60,000 | Plant and Machinery | 30,000 | |
| B | 40,000 | 1,00,000 | Stock | 20,000 |
| Creditor | 20,000 | Debtors | 10,000 | |
| Bank | 10,000 | |||
| 86,500 | 86,500 |
You are required to prepare the Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm after considering the following: (a) C brings 30,000 as capital for 1/4th share. He also brings 10,000 for his share of goodwill.
(b) Part of the Stock which had been included at cost of 2,000 had been badly damaged in storage and could only expect to realize 400.
(c) Bank charges had been overlooked and amounted to 200 for the year 2018-19.
(d) Depreciation on Building of 3,000 had been omitted for the year 2018-19. (e) A credit for goods for 800 had been omitted from both purchases and creditors although the goods had been correctly included in Stock.
(f) An expense of 1,200 for insurance premium was debited in the Profit and Loss Account of 2018-19 but 600 of this are related to the period after 31st March, 2019.
The solution of Question 74 Chapter 5 of +2-A: –
| Revaluation Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| To Stock A/c (2,000 – 400) | 1,600 | By Prepaid Insurance A/c | 600 | ||
| To Bank (charges) A/c | 200 | ||||
| To Building A/c | 3,000 | ||||
| To Creditors A/c | 800 | ||||
| Loss transferred to | |||||
| A Capital | 3,000 | ||||
| B Capital | 2,000 | 5,000 | |||
| 5,600 | 5,600 | ||||
| Partners’ Capital Account the year ended 31st March, 2019 |
|||||||
| Parti culars |
A | B | C |
Partic |
A |
B | C |
| To Revaluation A/c | 3,000 | 2,000 | – | By Balance B/d | 60,000 | 60,000 | – |
| By Bank A/c A/c | – | – | 30,000 | ||||
| By Premium for Goodwill A/c | 6,000 | 4,00 | 16,000 | ||||
| (20,000 + 800) | |||||||
| To Balance c/d | 63,000 |
42,000 | 30,000 | ||||
| 66,000 | 44,000 | 30,000 | 66,000 | 44,000 | 30,000 | ||
| Balance Sheet |
|||||
| Liabilities |
Amount | Assets | Amount | ||
| Creditors | (20,000 + 800) | 20,800 | Building | (50,000 – 3,000) | 47,000 |
| Plant and Machinery | 30,000 | ||||
| Stock | (20,000 – 1,600) | 18,400 | |||
| Capital: | Debtors | 10,000 | |||
| A | 63,000 | Bank | 49,800 | ||
| B | 42,000 | ||||
| C | 30,000 | 1,35,000 | |||
| 1,55,800 | 1,55,800 | ||||
| Bank Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| To Balance b/d | 10,000 | Revaluation (Bank charges) | 200 | ||
| To C’s Capital A/c | 30,000 | ||||
| To Premium for Goodwill A/c | 10,000 | By Balance c/d | 49,800 | ||
| 50,000 | 50,000 | ||||
Working Note:-
Calculation of Sacrificing Ratio
Old Ratio of A and B = 3 : 2
Sacrificing Ratio = 3 : 2
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Distribution of Premium for Goodwill
| A will get | = | 10,000 | X | 3 |
| 5 | ||||
| = | 6,000 |
| B will get | = | 10,000 | X | 2 |
| 5 | ||||
| = | 4,000 |
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. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
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
