# Question 83 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question No.83 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

Question 83 Chapter 5 of +2-A

83. Balance Sheet of Ram and Shyam who shares profits in the ratio of their capitals as at 31st March, 2019 is:

 Liabilities Assets Capital A/cs: Freehold Premises 20,000 Ram 30,000 Plant and Machinery 13,500 Shyam 25,000 55,000 Fixtures and Fittings 1,750 Current A/cs: Vehicles 1,350 Ram 2,000 Stock 14,100 Shyam 1,800 3,800 Bills Receivable 13,060 Creditors 19,000 Debtors 27,500 Bills Payable 16,000 Bank 1,590 Cash 950 93,800 93,800

On 1st April, 2019, they admitted Arjun into partnership on the following terms:
(a) Arjun to bring 20,000 as capital and 6,600 for goodwill, which is to be left in the business and he is to receive 1/4th share of the profits.
(b) Provision for Doubtful Debts is to be 2% on Debtors.
(c) Value of Stock to be written down by 5% .
(d) Freehold Premises are to be taken at a value of 22,400; Plant and Machinery 11,800; Fixtures and Fittings 1,540 and Vehicles 800. You are required to make necessary adjustments entries in the firm, give
Balance Sheet of the new firm as at 1st April, 2019 and also determine the ratio in which the partners will share profits, there being no change in the ratio of Ram and Shyam.

## The solution of Question 83 Chapter 5 of +2-A: –

 Revaluation Account Particular Amount Particular Amount Reserve for D. Debts (27,500 × 2%) 550 Free hold Premises (22,400 – 20,000) 2,400 Stock 705 Plant and Machinery (13,500 – 11,800) 1,700 Fixture and Fittings 210 Vehicles 550 Loss transferred to Ram’s Current 717 Shyam’s Current 598 1,315 25,000 25,000

 Partners’ Capital Account Particulars Ram Shyam Arjun Particulars Ram Shyam Arjun By Balance B/d 30,000 25,000 – By Bank A/c A/c – – 20,000 To Balance c/d 30,000 25,000 20,000 30,000 25,000 20,000 30,000 25,000 20,000

 Partners’ Capital Account Particulars Ram Shyam Arjun Particulars Ram Shyam Arjun To Revaluation A/c 717 598 – By Balance B/d 2,000 1,800 – To Balance c/d 4,883 4,202 – By Premium for Goodwill 3,600 3,000 – 5,600 4,800 – 5,600 4,800 –

 Balance Sheet Liabilities Amount Assets Amount Creditors 19,000 Freehold Premises 1,200 Bills Payable 16,000 Plant and Machinery 11,800 Capital A/cs: Fixture and Fittings 1,540 Ram Debtors 27,500 Shyam 30,000 Less: 2% Reserve for D. Debts 550 26,950 Arjun 25,000 Stock (14,100 – 705) 13,395 C 20,000 1,00,700 Bills Receivables 13,060 Current A/cs: Bank 1,590 Ram 4,883 Cash (950 + 20,000 + 6,600) 27,550 Shyam 4,202 9,085 Vehicles 800 1,19,085 1,19,085

 Date Particulars L.F. Debit Credit Cash A/c Dr 26,600 To Arjun’s Capital 20,000 To Premium for Goodwill A/c 6,600 (Arjun brought Capital and share of goodwill) Premium for Goodwill A/c Dr 6,600 To Ram’s Current A/c 3,600 To Shyam’s Current A/c 3 ,000 (Premium for Goodwill transferred to partners current account in sacrificing ratio i.e. 6:5)

Working Note:-

Calculation of Sacrificing Ratio
Old Ratio of Ram and Shyam = 3 : 2
Arjun admitted for 1/4 share of profit
Remaining share of A and B after C’s Admission = Total Share –  Arjun’s Share

 Remaining share = 1 – 1 4

 = 4 – 1 4
 = 3 4

New Ratio = Old Ratio − Combined share of Ram and Shyam

New Ratio = Combined share of A and B x Old Ratio

 Ram’s Sacrificing Ratio = 6 X 3 11 4
 = 18 44
 Shyam’s Sacrificing Ratio = 5 X 3 11 4
 = 15 44
 New Profit sharing Ratio between ram, Shyam and Arjun = 18 : 15 : 1 44 44 4
 = 18 : 15 : 11 44

 Ram will get = 6,600 X 6 11 = 3,600
 Shyam will get = 6,600 X 5 11 = 3,000

Valuation of Goodwill

 Ram will get = 1,315 X 2 10 = 717
 Shyam will get = 1,315 X 1 2 = 589

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. 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