Question 99 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 99 Chapter 5 of +2-A

Question 99 Chapter 5 of +2-A

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.

 

 

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
ulars

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

Sacrificing Ratio = Old Ratio – New Ratio

Pardeep’s New Ratio = 3 3
4 8
  = 6 – 3
8
  = 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
   

 

Distribution of Reserve Fund

Pradeep will get = 16,000 X 3
4
  = 12,000
   
Dhanraj will get = 16,000 X 1
4
  = 4,000
   

 

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
   

 

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)

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 99 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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