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Question 81 Chapter 6 of +2-A
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81. X, Y and Z were partners in a firm sharing profits and losses in the ratio of 3 : 2: 1. Z died on 30th June 2018. The Balance Sheet of the firm as at that 31st March 2018 is as follows:
| Liabilities | Amount | Assets | Amount | |
| X’s Capital A/c | 2,40,000 | Machinery | 2,40,000 | |
| Y’s Capital A/c | 1,60,000 | Furniture | 1,50,000 | |
| Z’s Capital A/c | 80,000 | 4,80,000 | Investments | 40,000 |
| X’s Current A/c | 16,000 | Stock | 64,000 | |
| Y’s Current A/c | 5,000 | Sundry Debtors | 50,000 | |
| Reserve | 60,000 | Bills Receivable | 22,000 | |
| Bills Payable | 34,000 | Cash at Bank | 37,000 | |
| Sundry Creditors | 40,000 | Cash in Hand | 22,000 | |
| Z’s Current A/c | 10,000 | |||
| 6,35,000 | 6,35,000 |
The following decisions were taken by the remaining partners:
a A Provision for Doubtful Debts is to be raised at 5% on Debtors.
b While Machinery to be decreased by 10%, Furniture and Stock are to be appreciated by 5% and 10% respectively.
c Advertising Expenses 4,200 are to be carried forward to the next accounting year and, therefore, it is to be adjusted through the Revaluation Account.
d Goodwill of the firm is valued at 60,000.
e X and Y are to share profits and losses equally in future.
f Profit for the year ended 31st March 2018 was 8,16,000 and Z’s share of profit till the date of death is to be determined on the basis of profit for the year ended 31st March 2018.
g The Fixed Capital Method is to be converted into the Fluctuating Capital Method by transferring the Current Account balances to the respective Partners’ Capital Accounts. Prepare the Revaluation Account, Partners’ Capital Accounts and prepare C’s Executors’ Account to show that C’s Executors were paid in two half-yearly instalments plus interest of 10% p.a. on the unpaid balance.
The first instalment was paid on 31st December 2018.
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The solution of Question 81 Chapter 6 of +2-A: –
| Revaluation Account | |||||
| Particular | Amount | Particular | Amount | ||
| Machinery | 1,00,000 | Furniture | 7,500 | ||
| Provision for Doubtful Debts | 2,500 | Stock | 6,400 | ||
| Prepaid Advertisement Expenses | 4,200 | ||||
| Loss transferred to | |||||
| X’s Capital A/c | 4,200 | ||||
| Y’s Capital A/c | 2,800 | ||||
| Z’s Capital A/c | 1,400 | 8,400 | |||
| 26,500 | 26,500 | ||||
| Partners’ Capital Account | |||||||
| Part. | X | Y | Z | Part. | X | Y | Z |
| To Current A/c | – | – | 10,000 | By Balance B/d | 2,40,000 | 1,60,000 | 80,000 |
| To Revaluation A/c | 4,200 | 2,800 | 1,400 | By Current A/c | 16,000 | 5,000 | – |
| To Z’s Capital A/c | – | 10,000 | – | By Reserve | 30,000 | 20,000 | 10,000 |
| To Z’s Capital A/c | – | 34,000 | – | By Y’s Capital A/c | – | – | 34,000 |
| To Executors A/c | – | – | 1,22,600 | By Y’s Capital A/c | – | – | 10,000 |
| – | – | ||||||
| To Balance c/d | 2,81,800 | 1,38,200 | – | ||||
| 2,86,000 | 1,85,00 | 1,34,000 | 2,86,000 | 1,85,00 | 1,34,000 | ||
| T’s Executor’s Account | ||||||
| Date | Particular | Amount | Date | Particular | Amount | |
| 2018 | ||||||
| Dec. 31 | To Bank A/c 61,300 + 6,130 | 67,430 | Jun. 30 | By Z’s Capital A/c | 1,22,600 | |
| 2019 | ||||||
| Mar. 31 | To Balance c/d | 62,832.5 | Dec. 31 | By Interest (1,22,600×10100×612 | 6,130 | |
| Mar. 31 | By Interest (61,300×10100×312) | 1,532.5 | ||||
| 1,30,262.5 | 1,30,262.5 | |||||
| 2019 | ||||||
| Jun. 30 | To Bank 61,300 + 3,065 | 28,750 | April 01 | By Balance b/d | 62,832.5 | |
| 2020 | ||||||
| Jan. 31 | To Cash A/c 25,000 + 2,500 | 27,500 | Jun. 30 | By Interest (61,300×10100×312 | 1,532.5 | |
| 64,365 | 64,365 | |||||
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Working Notes:
Calculation of Profit & Loss Suspense
| Profit & loss Suspense | = | 8,16,000 | X | 1 | X | 6 |
| 3 | 12 | |||||
| = | Rs 34,000 |
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
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