Question 74 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 74 Chapter 5 of +2-A

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
ulars

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

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)

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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Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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