Question 75 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 75 Chapter 5 of +2-A

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

 

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)

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 75 Chapter 5 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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