Question 78 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 78 Chapter 5 of +2-A

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
ulars

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)

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 78 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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