Question 79 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 79 Chapter 5 of +2-A

Question 79 Chapter 5 of +2-A

79. X and Y are partners sharing profits and losses in the ratio of 3/4 and 1/4. Their Balance Sheet as at 31st March, 2019 is:

Liabilities     Assets  
Capital A/cs:     Land and Building  1,25,000
X 1,50,00   Furniture 5,00
Y 80,000 2,30,00 Stock 1,00,000
Workmen Compensation Reserve   20,000 Sundry Debtors 80,000
Sundry Creditor   1,50,000 Bills Receivable 15,000
Bills Payable   37,50 Cash at Bank 1,00,000
      Cash in Hand 12,500
    4,37,500   4,37,500

They admit Z into partnership on 1st April, 2019 on the following terms:
(a) Goodwill is to be valued at 1,00,000.
(b) Stock and Furniture to be reduced by 10%.
(c) A Provision for Doubtful Debts is to be created @ 5% on Sundry Debtors. (d) The value of Land and Building is to be appreciated by 20%. (e) Z pays 50,000 as his capital for 1/5th share in the future profits. You are required to show Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm.

 

The solution of Question 79 Chapter 5 of +2-A: –

Revaluation Account
Particular
Amount Particular Amount
Stock   10,000 Land and Building  (1,25,000X 20%) 25,000
Furniture   500      
Provision for D. Debts   4,000      
           
Profit transferred to          
X Capital 7,875        
Y Capital 2,625 10,500      
    25,000     25,000

 

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

Parti
culars
X Y Z

Partic
ulars

X Y Z
To X’s Capita 15,000 By Balance B/d 1,50,000 80,000
To Y’s Capita 5,000 By Workmen’s Compensation 15,000 5,000
        By Revaluation (Profit) A/c 7,875 2,625
        By Bank A/c A/c 50,000
        By Z’s Capital 15,000 5,000
To Balance c/d 1,87,875
92,625 30,000        
  1,87,875 92,625 50,000   1,87,875 92,625 50,000



Balance Sheet
Liabilities
Amount Assets Amount
Sundry Creditors   1,50,000 Land and Building (1,25,000 + 25,000) 1,50,000
Bills Payable   37,500 Office Furniture 5,000 – 500) 4,500
      Stock (1,00,000 – 10,000) 90,000
Capital:     Debtors 80,000  
A 1,87,875   Less: 5% Provision for D. Debts 4,000 76,000
B 92,625   Cash at Bank   1,00,000
C 30,000 3,10,500 Cash in Hand  (12,500 + 50,000) 62,500
      Bills Receivable   15,000
    4,98,000     4,98,000

Working Note:-

Calculation of Sacrificing Ratio
Old Ratio of A and B = 3 : 2
Sacrificing Ratio = 3 : 2

Distribution of Premium for Goodwill

Z’s share of Goodwill = 1,00,000 X 1
5
  = 20,000
   
X will entitled to = 20,000 X 3
4
  = 15,000
   
Y will entitled to = 20,000 X 1
4
  = 5,000
   

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 79 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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