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Question 89 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 89 Chapter 5 of +2-A
Question No.89 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

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Question 89 Chapter 5 of +2-A

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89. The Balance Sheet of X, Y and Z who share profits and losses in the ratio of 3 : 2 : 1, as on 1st April, 2019 is as follows:

Liabilities  Assets 
Capital A/cs  Y’s Current Account7,000
X1,75,000 Land and Building1,75,000
Y1,50,000 Plant and Machinery67,500
Z1,25,0004,50,000Furniture80,000
Current A/cs:  Investments36,500
X4,000 Bills Receivable17,000
Z6,00010,000Sundry Debtors43,500
General Reserve 15,000Stock1,37,000
Profit and Loss A/c 7,000Bank43,500
Creditors 80,000  
Bills Payable 45,000  
  6,07,000 6,07,000

On the above date, W is admitted as a partner on the following terms:
(a) W will bring 50,000 as his capital and get 1/6th share in the profits.
(b) He will bring necessary amount for his share of goodwill premium. Goodwill of the firm is valued at 90,000.
(c) New profit-sharing ratio will be 2 : 2 : 1 : 1.
(d) A liability of 7,004 will be created against bills receivable discounted earlier but now dishonored.
(e) The value of stock, furniture and investments is reduced by 20%, whereas the value of Land and Building and Plant and Machinery will be appreciated by 20% and 10% respectively.
(f) Capital Accounts of the partners will be adjusted on the basis of W’s Capital through their Current Accounts.
Prepare Revaluation Account, Partners’ Current Accounts and Capital Accounts.

 

 

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The solution of Question 89 Chapter 5 of +2-A: –

Revaluation Account
Particular
AmountParticularAmount
Stock 27,400Land and Building 35,000
Furniture 16,000Plant and Machinery 6,750
Investments 7,300   
   Loss transferred to  
   X4,475 
   Y2,983 
   Z1,4928,950
  50,700  50,700

 

Partners’ Capital Account
Parti
culars
XYZ

Partic
ulars

XYZ
To Balance b/d7,000By Balance B/d4,0006,000
To Revaluation (Loss4,4752,9831,492By General Reserve7,5005,0002,500
    By Cash10,000
    By Profit and Loss A/c3,5002,3331,167
    By Premium for Goodwill Capital A/c15,000
    By Capital A/c75,00050,00075,000
        
To Balance c/d
100,525
47,350
83,175
    
 1,05,00057,33384,667 1,05,00057,33384,667

 

Partners’ Capital Account
ParticularsXYZW
Current A/c75,00050,00075,000 
     
To Balance c/d
1,00,000
1,00,000
50,000
50,000
 1,75,0001,75,0001,25,00050,000

 

Particulars

XYZW
By Balance B/d1,75,0001,50,0001,25,000
By Cash50,000
     
 1,05,00057,33384,66750,000

 

Working Note:-

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Sacrificing Ratio
Old Ratio = 3 : 2 : 1
New Ratio = 2 : 2 : 1 : 1
Sacrificing Ratio=Old Ratio-New Ratio

X’s New Ratio=32
66

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 =3 – 2
6
 =1 
 6
Y’s New Ratio=22
66
 =2 – 2
6
 =0
 6

Only X has sacrificed.

Distribution of Goodwill

W’s Share of Goodwill=90,000X1
6
 =15,000  

Only X has sacrificed his share, therefore, he will get Rs 15,000

 

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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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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