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

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

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Question 83 Chapter 5 of +2-A

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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 Premises20,000
Ram30,000 Plant and Machinery13,500
Shyam25,00055,000Fixtures and Fittings1,750
Current A/cs:  Vehicles1,350
Ram2,000 Stock14,100
Shyam1,8003,800Bills Receivable13,060
Creditors 19,000Debtors27,500
Bills Payable 16,000Bank1,590
   Cash950
  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
AmountParticularAmount
Reserve for D. Debts(27,500 × 2%)550Free hold Premises(22,400 – 20,000)2,400
Stock 705   
Plant and Machinery(13,500 – 11,800)1,700   
Fixture and Fittings 210   
Vehicles 550Loss transferred to  
   Ram’s Current717 
   Shyam’s Current 5981,315
  25,000  25,000

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Partners’ Capital Account
Parti
culars
RamShyam
Arjun

Partic
ulars

Ram
ShyamArjun
    By Balance B/d30,00025,000
    By Bank A/c A/c20,000
To Balance c/d 30,00025,00020,000    
 30,00025,00020,000 30,00025,00020,000

 

Partners’ Capital Account
Parti
culars
RamShyam
Arjun

Partic
ulars

Ram
ShyamArjun
To Revaluation A/c717598By Balance B/d2,0001,800
        
To Balance c/d 4,8834,202By Premium for Goodwill3,6003,000
 5,6004,800 5,6004,800



Balance Sheet
Liabilities
AmountAssetsAmount
Creditors 19,000Freehold Premises 1,200
Bills Payable 16,000Plant and Machinery 11,800
Capital A/cs:  Fixture and Fittings 1,540
Ram  Debtors27,500 
Shyam30,000 Less: 2% Reserve for D. Debts55026,950
Arjun25,000 Stock(14,100 – 705)13,395
C20,0001,00,700Bills Receivables 13,060
Current A/cs:  Bank 1,590
Ram4,883 Cash(950 + 20,000 + 6,600)27,550
Shyam4,2029,085Vehicles 800
  1,19,085  1,19,085

 

DateParticulars
L.F.DebitCredit
 Cash A/cDr 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/cDr 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=11
4

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 =4 – 1 
4
 =3 
 4

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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=6X3
114
 =18
 44
Shyam’s Sacrificing Ratio=5X3
114
 =15
 44
New Profit sharing Ratio between ram, Shyam and Arjun=18:15:1
44444
 =18 : 15 : 11
44

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Distribution of Premium for Goodwill

 

Ram will get=6,600X6
11
 =3,600
  
Shyam will get=6,600X5
11
 =3,000  

Valuation of Goodwill

Ram will get=1,315X2
10
 =717
  
Shyam will get=1,315X1
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)

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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Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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