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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 |
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 | |
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:-
Calculation of New profit-sharing ratio
D’s Share of Profits = 2/5
| Remaining share | = | 1 | – | 2 |
| 5 |
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| = | 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 |
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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 |
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
