Question 81 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 81 Chapter 6 of +2-A

Question 81 Chapter 6 of +2-A

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.

 

 

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

 

 

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)

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 81 Chapter 6 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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