Question 98 Chapter 5 of +2-A
98. Mohan and Sohan are in partnership sharing profits in the proportion of 3/5th and 2/5th respectively. Their Balance Sheet as at 31st March, 2019 was:
| Liabilities | Assets | ||||
| Mohan’s Capital | 2,000 | Plant | 650 | ||
| Sohan’s Capital | 1,000 | 3,000 | Cash | 650 | |
| Creditors | 400 | Debtors | 1,000 | ||
| Less: Provision for Doubtful Debts | 400 | 600 | |||
| Stock | 1,500 | ||||
| 3,400 | 3,400 |
They admit Rohan to a 1/3rd share upon the terms that he is to pay into the business 1,000 as Goodwill and sufficient Capital to give him a 1/3rd share of the total capital of the new firm. It was agreed that the Provision for Doubtful Debts be reduced to 100 and the Stock be revalued at 2,000 and that the Plant be reduced to 500. You are required to record the above in the Ledger of the firm and show Balance Sheet of the new partnership.
The solution of Question 98 Chapter 5 of +2-A: –
| Revaluation Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Plant | 150 | Reserve for Doubtful Debt | (400 – 100 | 300 | |
| Stock | 500 | ||||
| Profit on Revaluation | |||||
| Mohan Capital | 390 | ||||
| Sohan Capital | 260 | 650 | |||
| 800 | 800 | ||||
| Partners’ Capital Account |
|||||||
| Parti culars |
Mohan | Sohan | Rohan |
Partic |
Mohan | Sohan | Rohan |
| By Balance B/d | 2,000 | 1,000 | – | ||||
| By Revaluation | 390 | 260 |
– |
||||
| By Premium for Goodwill | 600 | 400 | – | ||||
| To Balance c/d | 2,990 | 1,660 | – | ||||
| 2,990 | 1,660 | – | 2,990 | 1,660 | – | ||
| By Balance B/d | 2,990 | 1,660 | – | ||||
| By Bank A/c | – | – | 2,325 | ||||
| To Balance c/d |
2,990 |
1,660 |
2,325 |
||||
| 2,990 | 1,660 | 2,325 | 2,990 | 1,660 | 2,325 | ||
| Balance Sheet |
|||||
| Liabilities |
Amount | Assets | Amount | ||
| Creditors | 40 | Cash | 3,975 | ||
| Debtors | 1,000 | ||||
| Capital: | Less: Reserve for D. Debt | 100 | 900 | ||
| Mohan | 2,85,000 | Stock | 2,000 | ||
| Sohan | 1,65,000 | Plant | 500 | ||
| Rohan | 3,00,000 | 7,50,000 | |||
| 7,375 | 7,375 | ||||
Working Note:-
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Old Ratio od Mohan and Sohan = 3 : 2
Sacrificing Ratio of Mohan and Sohan = 3 : 2
Distribution of Premium for Goodwill (in sacrificing ratio)
| Mohan will get | = | 1,000 | X | 3 |
| 5 | ||||
| = | 750 |
| Sohan will get | = | 1,000 | X | 3 |
| 5 | ||||
| = | 250 |
Distribution of Revaluation Profit
| Mohan will get | = | 650 | X | 3 |
| 5 | ||||
| = | 390 |
| Sohan will get | = | 650 | X | 3 |
| 5 | ||||
| = | 260 |
Calculation Rohan’s Capital
| Combined Capital of Mohan and Sohan after all adjustments | = | 2,990 + 1,660 |
| = | Rs 4,650 |
| Total Capital of the firm on the basis of combined capital of Mohan and Sohan= | = | 4,650 | X | 3 |
| 2 | ||||
| = | 6,975 |
| Rohan’s Capital | = | 6,975 | X | 1 |
| 3 | ||||
| = | 2,325 |
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| Cash Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Balance b/d | 650 | ||||
| Rohan’s Capital | 2,325 | ||||
| Premium for Goodwill | 1,000 | ||||
| Balance c/d | 3,975 | ||||
| 3,975 | 3,975 | ||||
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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