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Question 99 Chapter 5 of +2-A
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99. Pradeep and Dhanraj were partners in a firm sharing profits in the ratio of 3 : 1. Their Balance Sheet on 31st March, 2019 was:
| Liabilities | Assets | ||||
| Creditors | 30,000 | Cash | 4,000 | ||
| Bills Payable | 1,000 | Debtors | 50,000 | ||
| Reserve Fund | 16,000 | Less: Provision for Doubtful Debts | 5,000 | 45,000 | |
| Outstanding Salary | 3,000 | Stock | 30,000 | ||
| Capital A/cs: | Bills Receivable | 10,000 | |||
| Pradeep | 60,000 | Patents | 1,000 | ||
| Dhanraj | 20,000 | 80,000 | Machinery | 40,000 | |
| 1,30,000 | 1,30,000 |
They admitted Leander as a new partner on this date. New profit-sharing ratio is agreed as 3 : 2 : 3. Leander brings in proportionate capital after the following adjustments:
(a) Leander brings 16,000 as his share of goodwill.
(b) Provisions for Doubtful Debts is to be reduced by 2,000.
(c) There is an old Printer valued at 2,400. It does not appear in the books of the firm. It is now to be recorded.
(d) Patents are valueless. Prepare Revaluation Account, Capital Accounts and opening Balance Sheet of Pradeep, Dhanraj and Leander.
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The solution of Question 99 Chapter 5 of +2-A: –
| Revaluation Account | |||||
| Particular | Amount | Particular | Amount | ||
| Patents | 1,000 | Provision for Doubtful Debts | 2,000 | ||
| Typewriter | 2,400 | ||||
| Profit on Revaluation | |||||
| Mohan Capital | 2,550 | ||||
| Sohan Capital | 850 | 3,400 | |||
| 4,400 | 4,400 | ||||
| Partners’ Capital Account | |||||||
| Parti culars | Pradeep | Dhanraj | Leander | Partic | Pradeep | Dhanraj | Leander |
| By Balance B/d | 60,000 | 20,000 | – | ||||
| By Reserve Fund | 12,000 | 4,000 | – | ||||
| By Premium for Goodwill | 16,000 | – | – | ||||
| By Revaluation | 2,550 | 850 | – | ||||
| To Balance c/d | 90,550 | 24,850 | – | ||||
| 90,550 | 24,850 | – | 90,550 | 24,850 | – | ||
| By Balance B/d | 90,550 | 24,850 | – | ||||
| By Bank A/c | – | – | 69,240 | ||||
| To Balance c/d | 90,550 | 24,850 | 69,240 | ||||
| 90,550 | 24,850 | 69,240 | 90,550 | 24,850 | 69,240 | ||
| Balance Sheet | |||||
| Liabilities | Amount | Assets | Amount | ||
| Creditors | 30,000 | Stock | 30,000 | ||
| Bills Receivable | 1,000 | Debtors | 50,000 | ||
| Outstanding Salary | 3,000 | ||||
| Capital: | Less: Reserve for D. Debt | 3,000 | 47,000 | ||
| Pradeep | 90,550 | Bills Receivable | 10,000 | ||
| Dhanraj | 24,850 | Machinery | 40,000 | ||
| Leander | 69,240 | 1,84,640 | Typewriter | 2,400 | |
| Cash | 89,240 | ||||
| 2,18,640 | 2,18,640 | ||||
Working Note:-
Old Ratio of Pradeep and Dhanraj = 3 : 1
New Ratio of Pradeep ,Dhanraj and Leander = 3 : 2 : 3
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Sacrificing Ratio = Old Ratio – New Ratio
| Pardeep’s New Ratio | = | 3 | – | 3 |
| 4 | 8 |
| = | 6 – 3 | |
| 8 |
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| = | 3 | |
| 8 |
| Dhanraj’s New Ratio | = | 1 | – | 2 |
| 4 | 8 |
| = | 2- 2 | |
| 8 |
| = | 0 | |
| 8 |
Leander acquires his share of profit from Pradeep only. Therefore, amount for goodwill brought by Leander will be taken by Pradeep alone
Distribution of Revaluation Profit
| Pradeep will get | = | 3,400 | X | 3 |
| 4 | ||||
| = | 2,550 |
| Dhanraj will get | = | 3,400 | X | 3 |
| 1 | ||||
| = | 850 |
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Distribution of Reserve Fund
| Pradeep will get | = | 16,000 | X | 3 |
| 4 | ||||
| = | 12,000 |
| Dhanraj will get | = | 16,000 | X | 1 |
| 4 | ||||
| = | 4,000 |
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Calculation of Leander’s Capital
| Combined Capital of Pradeep and Dhanraj after all adjustments | = | 90,550 + 24,850 |
| = | 1, 15,400 |
Combined share of profit of Pradeep and Dhanraj = 1 − Leander share
| Remaining share | = | 1 | – | 3 |
| 8 |
| = | 8 – 3 | |
| 8 |
| = | 5 | |
| 8 |
| Total Capital of the firm on the basis of combined capital of Pradeep and Dhanraj | = | 1,15,400 | X | 8 |
| 5 | ||||
| = | 1,84,640 |
| Leander’s Capital | = | 1,84,640 | X | 3 |
| 8 | ||||
| = | 69,240 |
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| Cash Account | |||||
| Particular | Amount | Particular | Amount | ||
| Balance b/d | 4,000 | ||||
| Leander’s Capital | 69,240 | ||||
| Premium for Goodwill | 16,000 | ||||
| Balance c/d | 89,240 | ||||
| 89,240 | 89,240 | ||||
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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