Question 85 Chapter 5 of +2-A
85. X and Y are partners sharing profits equally. Their Balance Sheet as on 31st March, 2019 is given below:
| Liabilities | Assets | ||||
| Capital A/cs: | Land and Building | 1,50,000 | |||
| X | 1,50,000 | Plant and Machinery | 1,00,000 | ||
| Y | 1,00,000 | 2,50,000 | Furniture and Fittings | 25,000 | |
| Current A/cs: | Stock | 75,000 | |||
| X | 40,000 | Debtors | 75,000 | ||
| Y | 30,000 | 70,000 | Less: Provision for Doubtful Debts | 5,000 | 70,000 |
| Creditors | 1,30,000 | Bills Receivable | 30,000 | ||
| Bills Payable | 50,000 | Bank | 50,000 | ||
| 5,00,000 | 5,00,000 |
Z is admitted as a new partner for 1/4th share under the following terms:
(a) Z is to introduce 1,25,000 as capital.
(b) Goodwill of the firm was valued at nil.
(c) It is found that the creditors included a sum of 7,500 which was not to be paid. But it was also found that there was a liability for Compensation to Workmen amounting to 10,000.
(d) Provision for doubtful debts is to be created @ 10% on debtors.
(e) In regard to the Partners’ Capital Accounts, present Fixed Capital Account Method is to be converted into Fluctuating Capital Account Method. (f) Bills of 20,000 accepted from creditors were not recorded in the books. (g) X provides 50,000 loan to the business carrying interest @ 10% p.a. You are required to prepare Revaluation Account,
Partners’ Capital Accounts, Bank Account and the Balance Sheet of the new firm
The solution of Question 85 Chapter 5 of +2-A: –
| Revaluation Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Reserve for D. Debts | 2,500 | Creditors | 7,500 | ||
| Outstanding Rent | 10,000 | ||||
| Loss transferred to | |||||
| X’s Current A/c | 2,500 | ||||
| Y’s Current A/c | 2,500 | 5,000 | |||
| 12,500 | 12,500 | ||||
| Partners’ Current Account |
|||||||
| Parti culars |
X | Y |
Z |
Partic |
X |
Y | Z |
| To Revaluation A/c | 2,500 | 2,500 | – | By Balance B/d | 40,000 | 30,000 | – |
| – | – | – | |||||
| To Balance c/d | 37,500 | 27,500 | – | ||||
| 40,000 | 30,000 | – | 40,000 | 30,000 | – | ||
| Partners’ Capital Account |
|||||||
| Parti culars |
X | Y |
Z |
Partic |
X |
Y | Z |
| – | By Balance B/d | 1,50,000 | 1,00,000 | – | |||
| – | By Bank A/c A/c | – | – | 1,25,000 | |||
| – | By Current A/c | 37,500 | 27,500 | – | |||
| – | |||||||
| To Balance c/d | 1,87,500 | 1,27,500 | 1,25,000 | – | |||
| 1,87,500 | 1,27,500 | 1,25,000 | 1,87,500 | 1,27,500 | 1,25,000 | ||
| Balance Sheet |
|||||
| Liabilities |
Amount | Assets | Amount | ||
| Creditors | (1,30,000 – 7,500 – 20,000 | 1,02,500 | Land and Building | 1,50,000 | |
| Bills Payable | (50,000 + 20,000) | 70,000 | Plant and Machinery | 1,00,000 | |
| Capital A/cs: | Fixture and Fittings | 25,000 | |||
| X | 1,87,500 | Debtors | 75,000 | ||
| Y | 1,27,500 | Less: 5% Reserve for D. Debts | 7,500 | 67,500 | |
| Z | 1,25,000 | 4,40,000 | Bank | (50,000 + 1,25,000 + 50,000) | 2,25,000 |
| X’s Loan | 50,000 | Stock | 75,000 | ||
| Liability for WCF | 10,000 | Bills Receivables | 30,000 | ||
| 6,72,500 | 6,72,500 | ||||
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
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