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

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

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)

• 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