Question 94 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 94 Chapter 5 of +2-A

Question 94 Chapter 5 of +2-A

94. A, B and C are partners sharing profits and losses in the ratio of 2 : 3 : 5. On 31st March, 2019, their Balance Sheet was:

Liabilities     Assets  
Creditors   64,000 Cash 18,000
Bills Payable   22,000 Bills Receivable 14,000
General Reserve   14,000 Stock 44,000
Capital A/cs:     Debtors 42,000
A 36,000   Machinery 94,000
B 44,000   Goodwill  
C 52,000 1,32,000    
    2,32,000   2,32,000

They admit D into partnership on the following terms:
(a) Machinery is to be depreciated by 15%.
(b) Stock is to be revalued at 48,000.
(c) It is found that the Creditors included a sum of 12,000 which was not to be paid.
(d) Outstanding Rent is 1,900.
(e) D is to bring in 6,000 as goodwill and sufficient capital for 2/5th share.
(f) The partners decided to use 10% of the profits every year in providing drinking water in schools, where required.
Prepare Revaluation Account, Partners’ Capital Accounts, Cash Account and Balance Sheet of the new firm.

 

 

 

The solution of Question 94 Chapter 5 of +2-A: –

Revaluation Account
Particular
Amount Particular Amount
To Machinery A/c   14,100 By Stock A/c   4,000
To Outstanding Rent A/c   1,900 By Creditors A/c   12,000
    16,000     16,000

 

Partners’ Capital Account
Particulars A B C D
To Goodwill A/c 4,000 6,000 10,000  
         
         
         
To Balance c/d 1,10,000 44,000 52,000 88,000
  40,000 50,000 1,00,000 88,000

 

Particulars

A B C D
By Balance B/d 36,000 44,000 52,000  
By Bank A/c (WN2) 88,000
By Premium for Goodwill A/c 1,200 1,800 3,000
By General Reserve A/c 2,800 4,200 7,000
         
  40,000 50,000 62,000 88,000

 

 

Balance Sheet
Liabilities
Amount Assets Amount
Creditors   52,000 Cash (18,000 + 88,000 + 6,000) 1,12,000
Bills Payable   22,000 Bills Receivable   14,000
Outstanding Rent   1,900 Machinery 94,000  
Capital A/cs:     Less: Depreciation 14,100 79,900
A 36,000   Investments   25,000
B 44,000   Stock   48,000
C 52,000   Debtors   42,000
D 88,000 2,20,000      
    2,95,900     2,95,900

 

Working Note:-

Calculation of New profit-sharing ratio
D’s Share of Profits = 2/5

Remaining share = 1 2
5
  = 5 – 2
5
  = 3
  5

 

A’s New Share of Profits = 3 X 2
5 10
  = 6
  50
B’s New Share of Profits = 3 X 3
5 10
  = 9
  50
C’s New Share of Profit = 3 X 5
5 10
  = 15
  50

A : B : C : D = 6 : 9 : 15 : 20

Calculation of D’s Capita

Total Adjusted Capital of the Old Partners = A’s Capital + B’s Capital + C’s Capita
  = (36,000 + 44,000 + 52,000)
  = 1,32,000
Combined New Share of the Old Partners = (9/50 + 15/50)
  = 30/50 or 3/5


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

  = 1,32,000 X 5
3
  = 2,20,000    

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

  = 2,20,000 X 2
5
  = 88,000    

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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2 Book 1 min - Question 94 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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