Question 98 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 98 Chapter 5 of +2-A

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
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:-

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
   

 

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)

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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2 Book 1 min - Question 98 Chapter 5 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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