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VDO+ Tag:Question 45 Chapter 5 of Class 12 Part – 1 Usha Publication
45. ( Average Profit Method) The balance sheet of A and B who share profits and losses in the ratio of 3:2 as at 31st March 2015 was as follows:
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Video Tag:| Liabilities | Rs. | Assets | Rs |
| A’s Capital | 1,00,000 | Goodwill | 20,000 |
| B’s Capital | 75,000 | Plant | 45,000 |
| Creditors | 70,000 | Furniture and fittings | 37,500 |
| Provident Fund | 20,000 | Stock | 57,500 |
| Bills receivable | 10,000 | ||
| Debtors | 55,000 | ||
| Cash and bank | 40,000 | ||
| 2,65,000 | 2,65,000 |
C was admitted into the partnership on the following terms
(a) That the new profit sharing ratio shall be A 2/5th B 2/5th and C 1/5th
b) That C is to bring his capital of 50,000 in cash and to pay his share of Goodwill in the firm. Goodwill for this purpose is to be valued at 2 years purchase for an average of the previous 4 years profits. The profits for the previous 4 years are Rs. 25,000
Rs. 22,500 ;Rs. 25,000; Rs. 27,500.
(c) That the other assets are revalued as under-Plant Rs. 52,500 Furniture and fittings
Rs. 32.000: Stock Rs. 63,000 Debtors Rs. 50,000.
(d) That the value of assets except cash and bank shall remain unchanged
Give the necessary journal entries and the balance sheet of the reconstituted firm.
The solution of Question 45 Chapter 5 of Class 12 Part – 1 Usha Publication: –
| Journal | |||||
| Date | Particulars |
L.F. | Debit | Credit | |
| 1) | A’s Capital A/c | Dr. | 12,000 | ||
| B’s Capital A/c | Dr. | 8,000 | |||
| To Goodwill A/c | 20,000 | ||||
| (Being goodwill written off ) | |||||
| 2) | Bank A/c | Dr. | 60,000 | ||
| To C’s Capital A/c | 50,000 | ||||
| To Premium for Goodwill A/c | 10,000 | ||||
| (Being cash brought as capital and goodwill ) | |||||
| 3) | Premium for Goodwill A/c | Dr. | 10,000 | ||
| To A’s Capital A/c | 10,000 | ||||
| (Being goodwill transferred to A’s account ) | |||||
| 4) | Memorandum Revaluation A/c | Dr. | 10,500 | ||
| To Furniture and fittings | 5,500 | ||||
| To Debtors | 5,000 | ||||
| (Being assets revalued) | |||||
| 5) | Plant A/c | Dr. | 7,500 | ||
| Stock A/c | Dr. | 5,500 | |||
| To Memorandum Revaluation A/c | 13,000 | ||||
| (Being assets revalued) | |||||
| 6) | Memorandum Revaluation A/c | Dr. | 2,500 | ||
| To A’s Capital A/c | 1,500 | ||||
| To B’s Capital A/c | 1,000 | ||||
| (Being profit on revaluation distributed) | |||||
| 7) | Furniture and fittings | Dr. | 5,500 | ||
| Debtors | Dr. | 5,000 | |||
| To Memorandum Revaluation A/c | 10,500 | ||||
| (Being revaluation entry reversed) | |||||
| 8) | Memorandum Revaluation A/c | Dr. | 13,000 | ||
| To Plant A/c | . | 7,500 | |||
| To Stock A/c | 5,500 | ||||
| (Being revaluation entry reversed) | |||||
| 9) | A’s Capital A/c | Dr. | 1,000 | ||
| B’s Capital A/c | Dr. | 1,000 | |||
| C’s Capital A/c | Dr. | 500 | |||
| To Memorandum Revaluation A/c | 2,500 | ||||
| (Being memorandum loss distributed among all Partners in their new profit share ratio 2 : 2 : 1) | |||||
| Partners’ Capital Account |
|||||||
| Particulars | A | B | C | Particulars | A | B | C |
| To Goodwill A/c | 12,000 | 8,000 | By Balance b/d | 1,00,000 | 75,000 | ||
| To Memorandum Revaluation A/c |
1,000 | 1,000 | 500 | By Bank A/c | – | – | 50,000 |
| By Premium for Goodwill | 10,000 | – | – | ||||
| By Revaluation A/c | 1,500 | 1,000 | |||||
| To Balance c/d | 98,500 | 67,000 | 49,500 | ||||
| 1,11,500 | 76,000 | 60,000 | 1,11,500 | 76,000 | 60,000 | ||
| Balance Sheet |
|||||
| Liabilities |
Amount | Assets | Amount | ||
| A’s Capital | 98,500 | Plant | 45,000 | ||
| B’s Capital | 67,000 | Furniture and fittings | 37,500 | ||
| C’s Capital | 49,500 | 2,15,000 | Stock | 57,500 | |
| Creditors | 70,000 | Bills receivable | 10,000 | ||
| Provident Fund | 20,000 | Debtors | 55,000 | ||
| Cash and bank (Rs. 40,000+Rs. 60,000) |
1,00,000 | ||||
| 3,05,000 | 3,05,000 | ||||
Working Notes:
| Goodwill | = | Rs.(25,000+22,500+25,000+27,500) |
| 4 | ||
| = | Rs. 50,000 |
| C’s share of goodwill = | = | 1 | X | Rs 50,000 |
| 1 | ||||
| = | Rs 10,000 |
(ii) Sacrifice ratio:
| A’s sacrifice | = | 3 | – | 2 |
| 5 | 5 | |||
| = | 1 | |||
| 5 |
| B’s sacrifice | = | 2 | – | 2 |
| 5 | 5 | |||
| = | 0 | |||
| 5 |
Whole of sacrifice has been made by A
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End of Solution
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Chapter-Wise Solution of Usha Publication Accountancy – Part 1 Class 12 – Session 2024-25 as per the PSEB curriculum
Check out Solutions to all questions of the every chapter shown as under. The Solution of Accountancy – Part 1 Class 12 – Session 2024-25 is provided as per the new book published by Usha Publication.
Chapter No. 1 – Accounting Not-for-Profit Organisations (Deleted from the Syllabus)
Chapter No. 2 – Partnership Accounts – I (Introduction)
Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
Also, Check out our Comprehensive Chapter-wise solution of Advanced Accountancy Part 1 Class 12 by Unimax Publication
- Chapter No. 1 – Accounts of Non-Profit Organisations (Deleted from the Syllabus)
- Chapter No. 2 – Partnership Accounts – I (Basic Concepts)
- Chapter No. 3 – Partnership Accounts – II (Goodwill)
- Chapter No. 4 – Partnership Accounts – III (Change in Profit Sharing Ratio among Existing Partners)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
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