Advertisement

Question 88 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 88 Chapter 5 of +2-A
Question No.88 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

Advertisement

Question 88 Chapter 5 of +2-A

Advertisement

88. A and B were partners in a firm sharing profits in 3 : 1 ratio. They admitted C as a partner for 1/4th share in the future profits. C was to bring 60,000 for his capital. The Balance Sheet of A and B as at 1st April, 2019, the date on which C was admitted, was:

Liabilities  Assets  
Capital A/cs  Land and Building 40,000
A50,000 Plant ad Machinery 70,000
B80,0001,30,000Stock 30,000
General Reserve 10,000Debtors35,000 
Creditors 70,000Less: Provision for Doubtful Debts1,00034,000
   Investments 26,000
   Cash 10,000
  2,10,000  2,10,000

The other terms agreed upon were:
(a) Goodwill of the firm was valued at 24,000.
(b) Land and Building were valued at 65,000 and Plant and Machinery at 60,000.
(c) Provision for Doubtful Debts was found in excess by 400.
(d) A liability of 1,200 included in Sundry Creditors was not likely to arise.
(e) The capitals of the partners be adjusted on the basis of C’s contribution of capital to the firm. (f) Excess of shortfall, if any, be transferred to Current Accounts. Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm.

 

Advertisement-X

 

The solution of Question 88 Chapter 5 of +2-A: –

Revaluation Account
Particular
AmountParticularAmount
Plant and Machinery(70,000 – 60,000)10,000Land and Building(65,000 – 40,000)2,000
   Provision for Doubtful 400
   Creditors 1,200
      
Profit transferred to     
A Capital12,450    
B Capital4,15011,700   
  26,600  26,600

 

Partners’ Capital Account
Parti
culars
ABC

Partic
ulars

ABC
To Revaluation A/c7,8003,900By Balance B/d50,00080,000
    By General Reserve7,5002,500
    By Cash60,000
    By C’s Current A/c4,5001,500
To Balance c/d 74,45088,15040,000By Premium for Goodwill12,4504,150
        
 74,45088,15040,000 74,45088,15040,000
To B’s Current A/c43,150By Balance B/d74,45088,15060,000
    By A’s Current A/c60,550
To Balance c/d
1,35,000
45,000
60,000
    
 1,35,00088,15060,000 1,35,00088,15060,000



Balance Sheet
Liabilities
AmountAssetsAmount
Creditors(70,000 – 1,200)68,800Land and Building 65,000
B’s Current A/c 43,150Plant and Machinery 60,000
Capital A/cs:  Stock 30,000
A1,35,000 Debtors35,000 
B45,000 Less: Prov. for Bad Debts60034,400
C60,0002,40,000Investments 26,000
   Cash 70,000
   A’s Current A/c 60,550
   C’s Current A/c 6,000
  3,51,950  3,51,950

 

Working Note:-

Sacrificing Ratio
Old Ratio of A and B = 3 : 1
Sacrificing Ratio of A and B= 3 : 1

Distribution of Revaluation Loss

C’s Share of Goodwill=24,000X1
4
 =6,000  
A will get=6,000X3
4
 =4,500  
B will get=6,000X1
4
 =1,500  

Advertisement-Y

Advertisement-X

As C has not brought his share of goodwill in cash, hence, his share shall be debited to his current account

 

Distribution of Revaluation Profit

A will get=16,600X3
4
 =12,450
  
B will get=16,600X1
4
 =4,150
  

Adjustment of Capitals (in new ratio)

Total Capital of the firm on the basis of c’s share=40,000X4
1
 =1,60,000
  
Total Capital of the firm after C’s admission 60,000 × 4=2,40,000
Less: C’s Capital=60,000
Combined Capital of A and B=1,80,000

 

 

A’s Capital Share=1,80,000X3
4
 =1,35,000
  

Advertisement-X

 

B and C Capital Share=1,80,000X1
4
 =45,000
  
Cash Account
Particulars
AmountParticularsAmount
Balance b/d 10,000Balance c/d 70,000
C’s Capital 60,000   
  70,000  70,000

Advertisement-Y

 

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

 

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

Advertisement

Advertisement

error: Content is protected !!