Question 80 Chapter 6 of +2-A
80. X, Y and Z were partners in a firm sharing profits and losses in the 5 : 4 : 3. Their Balance Sheet on 31st March, 2018 was as follows:
| Liabilities | Amount | Assets | Amount | |
| Creditors | 2,00,000 | Building | 2,00,000 | |
| Employees’ Provident Fund | 1,50,000 | Machinery | 3,00,000 | |
| General Reserve | 36,000 | Furniture | 1,10,000 | |
| Investment Fluctuation Reserve | 14,000 | Investment Market value 86,000 | 1,00,000 | |
| Capital A/cs: | Debtors | 80,000 | ||
| X | 3,00,000 | Cash at Bank | 1,90,000 | |
| Y | 2,50,000 | Advertisement Suspense | 1,20,000 | |
| Z | 1,50,000 | 7,00,000 | ||
| 11,00,000 | 11,00,000 |
X died on 1st October 2018 and Y and Z decide to share future profits in the ratio of 7: 5. It was agreed between his executors and the remaining partners that:
i Goodwill of the firm be valued at 212 years’ purchase of average of four completed years’ profit which were:
| Years | 2014-15 | 2015-16 | 2016-17 | 2017-18 |
| Profit | 1,70,000 | 1,80,000 | 1,90,000 | 1,80,000 |
ii X’s share of profit from the closure of last accounting year till date of death be calculated on the basis of last years’ profit.
iii Building undervalued by 2,00,000; Machinery overvalued by 1,50,000 and Furniture overvalued by 46,000.
iv A provision of 5% be created on Debtors for Doubtful Debts.
v Interest on Capital to be provided at 10% p.a.
vi Half of the net amount payable to X’s executor was paid immediately and the balance was transferred to his loan account which was to be paid later.
Prepare Revaluation Account, X’s Capital Account and X’s Executor’s Account as on 1st October, 2018.
The solution of Question 80 Chapter 6 of +2-A: –
| Revaluation Account |
||||
| Particular | Amount | Particular | Amount | |
| To Machinery | 1,50,000 | By Building | 2,00,000 | |
| To Furniture | 46,000 | |||
| To Provision for Doubtful Debts | 4,000 | 27,000 | ||
| 2,00,000 | 2,00,000 | |||
| X’s Capital Account |
||||
| Particular | Amount | Particular | Amount | |
| To Advertisement Suspense A/c | 50,000 | By Balance b/d | 3,00,000 | |
| To X’s Executors A/c | 5,05,000 | By General Reserve | 15,000 | |
| By Y’s Capital A/c | 1,12,500 | |||
| By Z’s Capital A/c | 75,000 | |||
| By Profit & Loss Suspense | 37,500 | |||
| By Interest on Capital | 15,000 | |||
| 5,55,000 | 5,55,000 | |||
| X’s Executors Account |
||||
| Particular | Amount | Particular | Amount | |
| To Bank A/c | 2,52,500 | By X’s Capital A/c | 5,05,000 | |
| To X’s Executors Loan Account | 2,52,500 | |||
| 5,05,000 | 5,05,000 | |||
Working Notes:
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Calculation of Share in General Reserve
| Reserve | = | 36,000 | X | 5 |
| 12 | ||||
| = | Rs 15,000 |
Calculation of Interest on Capital
| Interest on capital | = | 3,00,000 | X | 10 | X | 6 |
| 100 | 12 | |||||
| = | Rs 15,000 |
Calculation of Profit & Loss Suspense
| Profit & Loss Suspense | = | 1,80,000 | X | 5 | X | 6 |
| 12 | 12 | |||||
| = | Rs 37,500 |
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
