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Question 79 Chapter 5 of +2-A
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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 | ||||
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| Partners’ Capital Account the year ended 31st March, 2019 | |||||||
| Parti culars | X | Y | Z | Partic | 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 |
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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
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