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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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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)
- 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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