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

Question 94 Chapter 5 of +2-A
Question No.94 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

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Question 94 Chapter 5 of +2-A

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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

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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.

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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

 

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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

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Working Note:-

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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

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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    

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

  = 2,20,000 X 2
5
  = 88,000    

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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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