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Question 92 Chapter 5 of +2-A
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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
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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 | 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
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| 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 |
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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)
- 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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
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