Question 97 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 97 Chapter 5 of +2-A

97. A and B are partners in a firm sharing profits and losses in the ratio 3 : 1. They admit C for 1/4th share on 31st March, 2014 when their Balance Sheet was as follows:

 Liabilities Assets Employees Provident Fund 17,000 Cash 6,100 Workmen Compensation Reserve 6,000 Stock 15,000 Investment Fluctuation Reserve 4,100 Debtors 50,000 Capital’s A/cs Less : Provision for Doubtful Debts 2,000 48,000 A 54,000 Investments 7,000 B 35,000 89,000 Goodwill 40,000 1,16,100 1,16,100

Liabilities Assets
Employees Provident Fund 17,000 Cash 6,100
Workmen Compensation Reserve 6,000 Stock 15,000
Investment Fluctuation Reserve 4,100 Debtors 50,000
Capital’s A/cs Less : Provision for Doubtful Debts 2,000 48,000
A 54,000 Investments 7,000
B 35,000 89,000 Goodwill 40,000
1,16,100 1,16,100

The solution of Question 97 Chapter 5 of +2-A: –

 Revaluation Account Particular Amount Particular Amount To Bad debts A/c 1,000 Loss on Revaluation A’s Capital A/c 750 B’s Capital A/c 250 1,000 1,000 1,000

 Partners’ Capital Account Particulars A B C Particulars A B C To Revaluation A/c 750 250 – By Balance B/d 54,000 35,000 – To Goodwill A/c 30,000 10,000 By Bank – – 23,200 By Premium for Goodwill 12,000 4,000 – By WCF 3,000 1,000 By IIF 1,200 400 To Balance c/d 2,00,000 2,00,000 2,00,000 3,16,000 3,04,000 2,00,000 3,16,000 3,04,000 2,00,000

Working Note:-

Calculation of C’s Capital

 C’s Capital = Total Adjusted Capital of A and B × Reciprocal of Combined Profit Share × C’s Profit Share A’s Adjusted Capital = 54,000+12,000+3,000+1,200-750-30,000 = 39,450 + 30,150 = Rs 69,600

 C’s Capital = 69,600 x 4 x 1 3 4 = 23,200

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

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