Question 83 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 83 Chapter 6 of +2-A

Question 83 Chapter 6 of +2-A

83. X, Y and Z were partners in a firm sharing profits in the ratio of 2: 2: 1. On 31st March 2018, their Balance Sheet was as follows:

Liabilities   Amount Assets Amount
Trade Creditors   1,20,000 Cash at Bank 1,80,000
Bills Payable   80,000 Stock 1,40,000
General Reserve   60,000 Sundry Debtors 80,000
Capital A/cs:      Building 3,00,000
X 7,00,000   Advance to Y 7,00,000
Y 7,00,000   Profit and Loss A/c 3,20,000
Z 60,000 14,60,000    
    17,20,000   17,20,000

Y died on 30th June 2018. The Partnership Deed provided for the following on the death of a partner:
i Goodwill of the business was to be calculated on the basis of 2 times the average profit of the past 5 years. Profits for the years ended 31st March, 2018, 31st March, 2017, 31st March, 2016, 31st March, 2015 and 31st March, 2014 were 3,20,000 Loss; 1,00,000; 1,60,000; 2,20,000 and 4,40,000 respectively.
ii Y’s share of profit or loss from 1st April 2018 till his death was to be calculated on the basis of the profit or loss for the year ended 31st March 2018. You are required to calculate the following:
a Goodwill of the firm and Y’s share of goodwill at the time of his death.
b Y’s share in the profit or loss of the firm till the date of his death.
c Prepare Y’s Capital Account at the time of his death to be presented to his executors.

 

The solution of Question 83 Chapter 6 of +2-A: –

 

Y’s Capital Account
Particular
Amount Particular Amount
Profit & Loss A/c 1,28,000 Balance b/d 7,00,000
Profit & Loss Suspense Share of Loss 32,000 General Reserve 24,000
Advance to Y 7,00,000 X’s Capital A/c   64,000
      Z’s Capital A/c   32,000
    8,20,000     8,20,000

Working Notes:

Calculation of Share in General Reserve

Reserve = 60,000 X 2
5
         
  = Rs 24,000    

 

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 83 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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