Question 82 Chapter 6 of +2-A
82. X, Y and Z are partners in firm sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance Sheet as at 31st March 2018 was as follows:
| Liabilities | Amount | Assets | Amount | ||
| Sundry Creditors | 18,000 | Goodwill | 12,000 | ||
| Investments Fluctuation Reserve | 7,000 | Patents | 52,000 | ||
| Workmen Compensation Reserve | 7,000 | Machinery | 62,400 | ||
| Capital A/cs: | Investment | 6,000 | |||
| X | 1,35,000 | Stock | 20,000 | ||
| Y | 95,000 | Sundry Debtors | 24,000 | ||
| Z | 74,000 | 3,04,000 | Less: Provision for Doubtful Debts | 4,000 | 20,000 |
| Loan to Z | 1,000 | ||||
| Cash at Bank | 600 | ||||
| Profit and Loss A/c | 1,50,000 | ||||
| Z’s Drawings | 12,000 | ||||
| 3,36,000 | 3,36,000 |
Z died on 1st April 2018, X and Y decide to share future profits and losses in the ratio of 3: 5. It was agreed that:
i Goodwill of the firm be valued 212 years’ purchase of average of four completed years’ profits which were: 2014-15— 1,00,000; 2015-16— 80,000; 2016-17— 82,000.
ii Stock is undervalued by 14,000 and machinery is overvalued by 13,600.
iii All debtors are good. A debtor whose dues of 400 were written off as bad debts paid 50% in full settlement.
iv Out of the amount of insurance premium debited to Profit and Loss Account, 2,200 be carried forward as prepaid insurance premium.
v 1,000 included in Sundry Creditors is not likely to arise.
vi A claim of 1,000 on account of Workmen Compensation to be provided for. vii Investment is sold for 8,200 and a sum of 11,200 be paid to executors of Z immediately. The balance to be paid in four equal half-yearly instalments together with interest @ 8% p.a. at half-year rest.
Show Revaluation Account, Capital Accounts of Partners and the Balance Sheet of the new firm
The solution of Question 82 Chapter 6 of +2-A: –
| Revaluation Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Machinery | 13,600 | Creditors | 1,000 | ||
| Stock | 14,000 | ||||
| Provision for Doubtful Debts | 4,000 | ||||
| Profit transferred to: | Investment | 2,200 | |||
| X’s Capital A/c | 5,000 | Bad Debts Recovered | 200 | ||
| Y’s Capital A/c | 3,000 | Prepaid Insurance | 2,200 | ||
| Z’s Capital A/c | 2,000 | 10,000 | |||
| 23,600 | 23,600 | ||||
| Partners’ Capital Account |
|||||||
| Part. | X | Y | Z |
Part. |
X | Y | Z |
| To Goodwill A/c | 6,000 | 3,600 | 2,400 | By Balance B/d | 1,35,000 | 95,000 | 74,000 |
| To Drawing A/c | – | – | 12,000 | By Revaluation A/c | 5,000 | 3,000 | 2,000 |
| To Profit & Loss A/c | 75,000 | 45,000 | 30,000 | By IFR | 3,500 | 2,100 | 1,400 |
| To X’s Capital A/c | – | 8,750 | – | By Y’s Capital A/c | 8,750 | – | 14,000 |
| To Z ’s Capital A/c | – | 14,000 | – | By WFC | 3,000 |
1,800 |
1,200 |
| To Loan to Z | 1,000 | By P & L Suspense A/c | – | – | 35,000 | ||
| To Executors A/c | 47,200 | ||||||
| To Balance c/d | 74,250 | 30,550 | – | ||||
| 1,55,250 | 1,01,900 | 92,600 | 1,55,250 | 1,01,900 | 92,600 | ||
| Z’s Executors Account |
||||
| Particular | Amount | Particular | Amount | |
| Bank A/c | 11,200 | Z’s Capital A/c | 47,200 | |
| Z’s Executors Loan Account | 36,000 | |||
| 47,200 | 47,200 | |||
| Balance Sheet |
|||||
| Liabilities |
Amount | Assets | Amount | ||
| Creditors | 17,000 | Patents | 52,000 | ||
| Z’s Executors Loan A/c | 36,000 | Machinery | 48,800 | ||
| Workmen Compensation Claim | 1,000 | Stock | 34,000 | ||
| Capital: | Debtors | 24,000 | |||
| X | 74,250 | Prepaid Insurance | 2,200 | ||
| Y | 30,550 | 30,550 | |||
| Bank Overdraft 600 + 8,200- 11,200 + 200 | 2,200 | ||||
| 1,61,000 | 1,61,000 | ||||
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
