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Question 77 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 77 Chapter 5 of +2-A
Question No.77 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

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Question 77 Chapter 5 of +2-A

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77. Following is the Balance Sheet of the firm, Ashirvad, owned by A, B and C who share profits and losses of the business in the ratio of 3 : 2 : 1.

Liabilities  Assets 
Capital A/cs:  Furniture95,000
A1,20,000 Business2,05,000
B1,20,000 Premises  Stock-in Trade40,000
C1,20,0003,60,000Debtors28,000
Sundry Creditors 20,000Cash at Bank15,000
Outstanding Salaries and wages 7,200Cash in Hand4,200
  3,87,200 3,87,200

On 1st April, 2019, they admit D as a partner on the following conditions:
(a) D will bring in 1,20,000 as his capital and also 30,000 as goodwill premium for a quarter of the share in the future profits/losses of the firm.
(b) Values of the fixed assets of the firm will be increased by 10% before the admission of D.
(c) Mohan, an old customer whose account was written off as bad debts, has promised to pay 3,000 in full settlement of his dues.
(d) Future profits and losses of the firm will be shared equally by all the partners. Pass the necessary Journal entries and prepare Revaluation Account, Partners’ Capital Accounts and opening Balance Sheet of the new firm

 

The solution of Question 77 Chapter 5 of +2-A: –

Revaluation Account
Particular
AmountParticularAmount
   Furniture95,000 × 10%9,500
   Business Premises2,05,000 × 10%20,500
To Profit Transferred to:     
A Capital15,000    
B Capital10,000    
C Capital5,00030,000   
      
  30,000  30,000

 

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

ParticularsABC
D
A’s Capital (Goodwill)7,500
B’s Capital (Goodwill)2,500
     
     
     
To Balance c/d 1,65,000
1,40,0001,12,0001,20,000
 1,65,0001,40,0001,25,0001,20,000

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Particulars

A
BC
D
By Balance B/d1,20,0001,20,0001,20,000
By Revaluation (Profit)
A/c
15,00010,0005,000
By Cash
A/c
1,20,000
By Premium for Goodwill
A/c
22,5007,500
By C’s Capital (Goodwill)
A/c
7,5002,500
     
 1,65,0001,40,0001,25,0001,20,000

 

 

 

Balance Sheet
Liabilities
AmountAssetsAmount
Sundry Creditor 20,000Furniture(95,000 + 9,500)1,04,500
Outstanding salaries and wages 7,200Business Premises(2,05,000+20,500)2,25,500
   Stock-in-Trade 40,000
Capital:  Debtors 28,000
A1,65,000 Cash at Bank 15,000
B1,40,000 Cash in hand (4,200 + 1,50,000)1,54,200
C1,15,000    
D1,20,0005,40,000   
  5,67,200  5,67,200

 

Working Note:-

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Calculation of Sacrificing Ratio
Old Ratio of A, Band C = 3 : 2 : 1
New Ratio = 1 : : 1 : 1 : 1 

Sacrificing Ratio = Old Ratio − New Ratio

A’s Sacrificing Ratio=31
64

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 =12 – 6
24
 =6
 24

 

B’s Sacrificing Ratio=21
64
 =8 – 6
24
 =2
 24

 

C’s Sacrificing Ratio=11
64
 =4 – 6
24
 =-2
 24
Sacrifice Ratio of A and B=6 : 2
 =3 : 1

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Calculation of C’s gain in goodwill

Goodwill of the firm=D’s goodwillX4
1

 

 =30,000X4
1
 =1,20,000
  
C’s Goodwill=1,20,000X2
24
 =10,000
  

 

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Amount of Goodwill to be distributed between A and B (Sacrificing Partners)

A will get=30,000X3
4
 =22,500
  
B will get=30,000X1
4
 =7,500  

Distributed of C’s Gain in goodwill

A will get=10,000X3
4
 =7,500
  
B will get=10,000X1
4
 =2,500
  


T.S. Gre
wal’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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