Question 98 Chapter 5 of +2-A - T.S. Grewal 12 Class Part

Question 98 Chapter 5 of +2-A

Table of Contents

The solution of Question 98 Chapter 5 of +2-A: –

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

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.

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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 ulars	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

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Distribution of Revaluation Profit

Mohan will get	=	650	X	3
				5
	=	390

Sohan will get	=	650	X	3
				5
	=	260

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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

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

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