Question 82 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 82 Chapter 6 of +2-A

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
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)

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 82 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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