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Question 93 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 93 Chapter 5 of +2-A
Question No.93 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

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Question 93 Chapter 5 of +2-A

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93. Sarthak and Vansh are partners sharing profits in the ratio of 2 : 1. Since both of them are specially abled sometimes they find it difficult to run the business on their own. Mansi, a common friend, decides to help them. Therefore, they admit her into partnership for 1/3rd share in profits. She brings 60,000 for goodwill and proportionate capital. At the time of admission of Mansi, the Balance Sheet of Sarthak and Vansh was as under:

Liabilities  Assets  
Capital A/cs:  Plant 66,000
Sarthak70,000 Furniture 30,000
Vansh60,0001,30,000Investments 40,000
General Reserve 18,000Stock 46,000
Bank Loan 18,000Debtors38,000 
Creditors 72,000Less: Provision for Bad Debts4,00034,000
   Cash 22,000
  2,38,000  2,38,000

It was decided to:
(a) Reduce the value of Stock by 10,000.
(b) Plant is to be valued at 80,000.
(c) An amount of 3,000 included in Creditors was not payable.
(d) Half of the investments were taken over by Sarthak and remaining were valued at 25,000.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of reconstituted firm.

 

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The solution of Question 93 Chapter 5 of +2-A: –

Revaluation Account
Particular
AmountParticularAmount
To Stock A/c 10,000By Plant A/c 14,000
   By Creditors A/c 3,000
   By Investments A/c 5,000
Profit transferred to     
Sarthak’s Capital A/c8,000    
Vansh’s Capital A/c4,00012,000   
  22,000  22,000

 

Partners’ Capital Account
Parti
culars
SarthakVanshMansi

Partic
ulars

SarthakVanshMansi
To Investments A/c20,000By Balance B/d70,00060,000
    By Cash A/c1,00,000
    By Premium for Goodwill40,00020,000
    By General Reserve A/c12,0006,000
    By Revaluation (Profit)8,0004,000
To Balance c/d 1,10,00090,0001,00,000    
        
 1,30,00090,0001,00,000 1,30,00090,0001,00,000

 

Balance Sheet
Liabilities
AmountAssetsAmount
Bank Loan 18,000Plant 80,000
Creditors 69,000Furniture 30,000
   Debtors38,000 
Capital A/cs:  Less: Provision for Bad debts4,00034,000
Sarthak1,10,000 Investments 25,000
Vansh90,000 Stock 36,000
Mansi1,00,0003,00,000Cash(22,000 + 60,000 + 1,00,0001,82,000
  3,87,000  3,87,000

 

Working Note:-

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Calculation of New profit-sharing ratio
Mansi’s Share of Profits = 1/3

Remaining share=11
3
 =3 – 1
3

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 =2
 3

 

Sarthak’s New Share of Profits=2X2
32
 =4
 9
Vansh’s New Share of Profits=2X1
33
 =2
 9
   

Sarthak : Vansh : Mansi = 4 : 2 : 3

Calculation of Mansi’s Capital 

Total Adjusted Capital of the Old Partners=Sarthak’s Capital + Vansh’s Capital
 =(1,10,000 + 90,000)
 =2,00,000
Combined New Share of the Old Partners=(4/9 + 2/9)
 =6/9 or 2/3

 

Total Capital of the new firm = (Adjusted Capital of the Old Partners × Reciprocal of Combined New Share of the Old Partners)

 =2,00,000X3
2
 =3,00,000  

Calculation of Mansi’s Capital
Mansi’s Capital = (Total Capital of the new firm × His Share of Profits)

 =3,00,000X1
3
 =1,00,000  

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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

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