Question 78 Chapter 5 of +2-A
78. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following is their Balance Sheet as at 31st March, 2019:
| Liabilities | Assets | |||
| Capital A/cs: | Building | 35,000 | ||
| A | 50,000 | Machinery | 25,000 | |
| B | 30,000 | 80,000 | Stock | 15,00 |
| Creditors | 20,000 | Debtor | 15,000 | |
| Investments | 5,000 | |||
| Bank | 5,000 | |||
| 1,00,000 | 1,00,000 |
C is admitted as a partner on 1st April, 2019 on the following terms:
(a) C is to pay 20,000 as capital for 1/4th share. He also pays 5,000 as premium for goodwill.
(b) Debtors amounted to 3,000 is to be written off as bad and a Provision of 10% is created against Doubtful Debts on the remaining amount.
(c) No entry has been passed in respect of a debt of 300 recovered by A from a customer, which was previously written off as bad in previous year. The amount is to be paid by A.
(d) Investments are taken over by B at their market value of 4,900 against cash payment. You are required to prepare Revaluation Account, Partner’s Capital Accounts and new Balance Sheet
The solution of Question 78 Chapter 5 of +2-A: –
| Revaluation Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| A’s Capital A/c | 300 | A’s Capital A/c | 300 | ||
| Provision for Doubtful Debts | 1,200 | ||||
| Investment (5,000 – 4,900) | 100 | ||||
| Loss transferred to | |||||
| A Capital | 2,400 | ||||
| B Capital | 1,600 | 4,000 | |||
| 4,300 | 4,300 | ||||
| Partners’ Capital Account the year ended 31st March, 2019 |
|||||||
| Parti culars |
A | B | C |
Partic |
A |
B | C |
| To Revaluation A/c | 2,400 | 2,400 | – | By Balance B/d | 50,000 | 30,000 | – |
| To Reserve A/c | 6,000 | 4,000 | By Bank A/c A/c | – | – | 20,000 | |
| By Premium for Goodwill | 3,000 | 2,000 | – | ||||
| To Balance c/d | 50,300 |
30,400 | 20,000 | ||||
| 53,000 | 32,000 | 20,000 | 53,000 | 32,000 | 20,000 | ||
| Balance Sheet |
|||||
| Liabilities |
Amount | Assets | Amount | ||
| Creditors | 20,000 | Building | 35,000 | ||
| Machinery | 25,000 | ||||
| Stock | 15,000 | ||||
| Capital: | Debtors | 15,000 | |||
| A | 50,300 | Less: Bad Debt | 3,000 | ||
| B | 30,400 | Less: Prov. for D. Debts | 1,200 | 10,800 | |
| C | 20,000 | 1,00,700 | Bank | 34,900 | |
| 1,53,000 | 1,53,000 | ||||
| Bank Account |
|||||
| Liabilities |
Amount | Assets | Amount | ||
| To Balance b/d | 5,000 | ||||
| To C’s Capital A/c | 20,000 | ||||
| To Premium for Goodwill A/c | 5,000 | ||||
| To Investment A/c | 4,900 | ||||
| By Balance c/d | 34,900 | ||||
| 34,900 | 34,900 | ||||
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 | = | 5,000 | X | 3 |
| 5 | ||||
| = | 3,000 |
| B will get | = | 5,000 | X | 2 |
| 5 | ||||
| = | 2,000 |
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
