Question 92 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 92 Chapter 5 of +2-A

Question 92 Chapter 5 of +2-A

92. Following is the Balance Sheet of Abha and Binay as at 31st March, 2014:

Liabilities     Assets    
Creditors   13,000 Bank   15,000
Employees Provident Fund   8,000 Debtors 22,000  
Workmen Compensation Fund   15,000 Less : Provision for Doubtful Debts 1,000 21,000
Capital A/cs     Stock   10,000
Abha 55,000   Plant and Machinery   60,000
Binay 30,000 85,000 Goodwill   10,000
      Profit and Loss   5,000
    1,21,000     1,21,000

Chitra was admitted as a partner for 1/4th share in the profits of the firm. It was decided that:
(a) Bad Debts amounted to 1,500 will be written off.
(b) Stock worth 8,000 was taken over by Abha and Binay at Book Value in their profit-sharing ratio. The remaining stock was valued at 2,500.
(c) Plant and Machinery and Goodwill were valued at 32,000 and 20,000 respectively.
(d) Chitra brought her share of goodwill in cash.
(e) Chitra will bring proportionate capital and the capitals of Abha and Binay will be adjusted in their profit-sharing ratio by bringing in or paying off cash as the case may be.
Prepare Revaluation Account and Partners’ Capital Accounts

 

 

 

The solution of Question 92 Chapter 5 of +2-A: –

Revaluation Account
Particular
Amount Particular Amount
Bad debts   500 Stock   500
Plant and Machinery   28,000      
           
      Loss on Revaluation    
      Abha’s Capital A/c 14,000  
      Binay’s Capital A/c 14,000 28,000
    28,500     28,500

 

Partners’ Capital Account
Parti
culars
Abha Binay Chitra

Partic
ulars

Abha Binay Chitra
To Revaluation A/c 14,000 14,000 By Balance B/d 55,000 30,000
To Investment A/c 5,000 5,000 By Bank

18,000

To Profit and Loss 2,500 2,500 By Premium for Goodwill 2,500 2,500
To Stock 4,000 4,000 By WCF 7,500 7,500
To Balance c/d 39,500 14,500 18,000        
  65,000 40,000 18,000   65,000 40,000 18,000
To Bank A/c 12,500 By Balance B/d 39,500 14,500 18,000
        By A’s Current A/c 60,550
To Balance c/d
27,000
27,000
18,000
       
  39,500 27,000 18,000   39,500 27,000 18,000

 

Working Note:-

Calculation of New Capital

New Capita = Total Adjusted Capital × Respective Partner’s Profit Share

Abha ’s New Capital = 54,000 X 1
2
  = 27,000    
Binay’s New Capital = 54,000 X 1
2
  = 27,000    

Calculation of Chitra’s Share of Goodwill
Chitra’s Share = Firm’s Goodwill × Chitra’s Profit Share

  = 20,000 X 1
4
  = 5,000    

This will be shared between Abha and Binay in sacrificing ratio 1:1

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 92 Chapter 5 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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