Question 75 Chapter 5 of +2-A
75. Divya, Yasmin and Fatima are partners in a firm, sharing profits and losses in 11 : 7 : 2 respectively. The Balance Sheet of the firm on 31st March, 2018 was as follows: BALANCE SHEET as at 31st March, 2018
| Liabilities | Amount | Assets | Amount | ||
| Sundry Creditors | 70,000 | Factory Building | 7,35,000 | ||
| Public Deposits | 1,19,000 | Plant and Machinery | 1,80,000 | ||
| Reserve Fund | 90,000 | Furniture | 2,60,000 | ||
| Outstanding Expenses | 10,000 | Stock | 1,45,000 | ||
| Capital A/cs: | Debtors | 1,50,000 | |||
| Divya | 5,10,000 | Less: Provision | -30,000 | 1,20,000 | |
| Yasmin | 3,00,000 | Cash at Bank | 1,59,000 | ||
| Fatima | 5,00,000 | 13,10,000 | |||
| 15,99,000 | 15,99,000 |
On 1st April, 2018, Aditya is admitted as a partner for one-fifth share in the profits with a capital of 4,50,000 and necessary amount for his share of goodwill on the following terms:
(a) Furniture of 2,40,000 were to be taken over Divya, Yasmin and Fatima equally.
(b) A creditor of 7,000 not recorded in books to be taken into account.
(c) Goodwill of the firm is to be valued at 2.5 years’ purchase of average profits of last two years. The profit of the last three years were: 2015-16 − 6,00,000; 2016-17 − 2,00,000; 2017-18 − 6,00,000.
(d) At time of Aditya’s admission. Yasmin also brought in 50,000 as fresh capital.
(e) Plant and Machinery is re-valued to 2,00,000 and expenses outstanding were brought down to 9,000. Prepare Revaluation Account, Partners Capital Account and the Balance Sheet of the reconstituted firm.
The solution of Question 75 Chapter 5 of +2-A: –
| Revaluation Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| To Sundry Creditors A/c | 1,600 | By Plant and Machinery A/c | 20,000 | ||
| By Outstanding Expenses A/c | 1,000 | ||||
| To Profit Transferred to: | |||||
| Divya’s Capital A/c | 7,700 | ||||
| Yasmin’s Capital A/c | 4,900 | ||||
| Fatima’s Capital A/c | 1,400 | 14,000 | |||
| 21,000 | 21,000 | ||||
| Partners’ Capital Account the year ended 31st March, 2019 |
||||
| Particulars | Divya | Yasmin | Fatima |
Aditya |
| To Furniture A/c | 80,000 | 80,000 | 80,000 | – |
| To Revaluation (Loss | 300 | 200 | 100 | |
| To Balance c/d | 5,97,200 |
3,76,400 | 4,50,400 | 4,50,000 |
| 6,77,200 | 4,56,400 | 5,30,400 | 4,50,000 | |
|
Particulars |
Divya |
Yasmin | Fatima |
Aditya |
| By Balance B/d | 5,10,000 | 3,00,000 | 5,00,000 | – |
| By Bank A/c | – | 50,000 | – | 4,50,000 |
| By Premium for Goodwill A/c | 1,10,000 | 70,000 | 20,000 | – |
| By Reserve Fund A/c | 49,500 | 31,500 | 9,000 | – |
| By Revaluation A/c | 7,700 | 4,900 | 1,400 | – |
| 6,77,200 | 4,56,400 | 5,30,400 | 4,50,000 |
| Balance Sheet |
|||||
| Liabilities |
Amount | Assets | Amount | ||
| Sundry Creditor | 77,000 | Factory Building | 7,35,000 | ||
| Public Deposits | 1,19,000 | Plant and Machinery | 2,00,000 | ||
| Outstanding Expenses | 9,000 | Furniture | 20,000 | ||
| Capital: | Stock | 1,45,000 | |||
| Divya | 5,97,200 | Bank | 49,800 | ||
| Yasmin | 3,76,400 | Debtors | 1,50,000 | ||
| Fatima | 4,50,400 | Less: Provision | 30,000 | 1,20,000 | |
| Aditya | 4,50,400 | 18,74,000 | Cash at Bank | (1,59,000 + 2,00,000 + 50,000 + 4,50,000) | 8,59,000 |
| 20,79,000 | 20,79,000 | ||||
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Working Note:-
Calculation of Goodwill brought in by Aditya
| Average Profits | = | (Normal profits from 31st March, 2017 to 31st March, 2018)/2 |
| = | (2,00,000 + 6,00,000)/2 | |
| = | 4,00,000 | |
| Goodwill | = | Average Profits × No. of years of Purchase |
| = | (4,00,000 × 2.5) | |
| = | 10,00,000 | |
| Goodwill brought in by Aditya | = | (10,00,000 × 1/5) |
| = | = 2,00,000 |
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
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