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Page No 4.100:

Answer:

Revaluation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Bad Debts

3,000

A's Capital A/c

300

Provision for Doubtful Debts

1,200

Loss transferred to         

 

Investment (5,000 – 4,900)

100

A Capital

2,400

 

 

B Capital

1,600

 

4,300

 

4,300

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

Revaluation

2,400

1,600

 

Balance b/d

50,000

30,000

 

Revaluation

300

 

 

Bank

 

 

20,000

 

 

 

 

Premium for Goodwill

3,000

2,000

 

Balance c/d

50,300

30,400

20,000

 

 

 

 

 

53,000

32,000

20,000

 

53,000

32,000

20,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2016 after C’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

Buildings

35,000

    A

50,300

 

Machinery

25,000

    B

30,400

 

Stock

15,000

   C

20,000

1,00,700

Debtors

15,000

 

Creditors

20,000

Less: Bad Debts

3,000

 

 

 

 

12,000

 

 

 

Less: 10% Provision for Doubtful Debts

1,200

10,800

 

 

Bank

34,900

 

1,20,700

 

1,20,700

 

 

 

 

 

Bank Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

5,000

 

 

C’s Capital

20,000

 

 

Premium for Goodwill

5,000

 

 

Investments

4,900

Balance c/d

34,900

   

 

 

 

34,900

 

34,900

 

 

 

 


Working Notes:

WN1


WN2
Distribution of Premium for Goodwill


WN3
Sale of Investments

Bank A/c

Dr.

4,900

 

Revaluation A/c

Dr.

100

 

To Investment

 

5,000


WN4

Bad debt Recovered

A's Capital A/c        

Dr.

300

 

To Revaluation A/c

 

 

300

Page No 4.100:

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

10,000

Land and Building

25,000

Furniture

500

   (1,25,000 × 20%)

 

Provision for D. Debts

4,000

 

 

Profit transferred to

 

 

 

X Capital

7,875

 

 

Y Capital

2,625

 

 

 

25,000

 

25,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

X’s Capital

 

 

15,000

Balance b/d

1,50,000

80,000

 

Y’s Capital

 

 

5,000

Workmen’s Compensation Fund

15,000

5,000

 

 

 

 

 

Revaluation (Profit)

7,875

2,625

 

Balance c/d

1,87,875

92,625

30,000

Cash

 

 

50,000

 

 

 

 

Z’s Capital

15,000

5,000

 

 

1,87,875

92,625

50,000

 

1,87,875

92,625

50,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2017 after Z’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

Land and Building (1,25,000 + 25,000)

1,50,000

  X

1,87,875

 

 

 

  Y

92,625

 

Office Furniture (5,000 – 500)

4,500

  Z

30,000

3,10,500

Stock (1,00,000 – 10,000)

90,000

Sundry Creditors                      

1,50,000

Sundry Debtors

80,000

 

Bills Payable

37,500

Less: 5% Provision for D. Debts

4,000

76,000

 

 

Cash at Bank

1,00,000

 

 

Cash in Hand (12,500 + 50,000)

62,500

 

 

Bills Receivable

15,000

 

4,98,000

 

4,98,000

 

 

 

 


Working Notes:

WN1: Sacrificing Ratio


WN2: Calculation of Partners' Share of Goodwill
Goodwill of the firm = 1, 00,000

 

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Z’s Capital A/c

Dr.

 

20,000

 

 

To X’s Capital A/c

 

 

15,000

 

To Y’s Capital A/c

 

 

5,000

 

(Z’s share of goodwill changed from his
Capital Account)

 

 

 

 

 

 

 

 

 

Workmen’s Compensation Fund A/c

 

20,000

 

 

To X’s Capital A/c

 

 

15,000

 

To Y’s Capital

 

 

5,000

 

(Workmen’s Compensation Fund distributed)

 

 

 

 

 

 

 

 



Page No 4.101:

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Reserve for D. Debts

4,000

 

Plant and Machinery

12,000

Less: Old Reserve

800

3,200

    (60,000 – 48,000)

 

 

 

 

 

Furniture          10,000 × 10% 1,000 Stock (40,000 – 32,000) 8,000

Outstanding salary

8,000

 

 

Profit transferred to  

 

Land and Building

10,000

   Deepika Capital

10,680

    (50,000 × 20%)

 

   Rajshree Capital

7,120

 

 

 

30,000

 

30,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

Deepika

Rajshree

Anshu

Particulars

Deepika

Rajshree

Anshu

Balance c/d

58,680

47,120

32,000

Balance b/d

48,000

40,000

 

(before adjustment of Goodwill)

 

 

 

 

 

 

 

 

 

 

 

Revaluation

10,680

7,120

 

 

 

 

 

Cash

 

 

32,000

 

58,680

47,120

32,000

 

58,680

47,120

32,000

 

 

 

 

 

 

 

 

Deepika

 

 

2,220

Balance b/d

58,680

47,120

32,000

Rajshree

 

 

2,220

Anshu’s Capital (Goodwill)

2,220

2,220

 

Balance c/d

60,900

49,340

27,560

 

 

 

 

 

60,900

49,340

32,000

 

60,900

49,340

32,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after Anshu’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

Outstanding Salaries

8,000

Cash in Hand

1,200

Sundry Creditors

16,000

Cash at Bank

28,800

Public Deposits

61,000

Stock

40,000

Outstanding Liabilities                 

2,000

Prepaid Insurance

1,000

Capital A/cs:

 

Sundry Debtors

28,800

 

Deepika

60,900

 

Less: reserve for D. Debts

4,000

24,800

Rajshree

49,340

 

Plant and Machinery

60,000

Anshu

27,560

1,37,800

Land and Building

60,000

 

 

Furniture

9,000

 

2,24,800

 

2,24,800

 

 

 

 


Working Notes

WN1: Calculation of Sacrificing Ratio

Sacrificing Ratio = Old Ratio − New Ratio



WN2: Valuation of Goodwill
Capitalised value on the basis of Anshu’s share
Actual Capital of all partners before adjustment of Goodwill = 58,680 + 47,120 + 32,000
= Rs 1,37,800
Goodwill = Capitalised value − Actual Capital of all partners before adjustment of Goodwill
= 1,60,000 − 1,37,800
= Rs 22,200
Anshu’s share of Goodwill
Deepika and Rajshree each will entitle for Goodwill

Page No 4.101:

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Patents

10,000

Provision for D. Debts

5,000

 

 

 

Less: New Provision

(2,200)

2,800

 

 

Loss transferred to

 

 

 

X Capital

4,500

 

 

Y Capital

2,700

 

10,000

 

10,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

X’s Capital (General Reserve)

 

2,750

2,000

Balance b/d

40,000

50,000

 

 

 

 

 

Y’s Capital (General Reserve)

2,750

 

 

X’s Capital (Goodwill)

 

4,950

3,600

Z’s Capital (General Reserve)

2,000

 

 

 

 

 

 

Cash

 

 

25,000

Revaluation

4,500

2,700

 

Y’s Capital (Goodwill)

4,950

 

 

 

 

 

 

Z’s Capital (Goodwill)

3,600

 

 

Balance c/d

48,800

39,600

19,400

 

 

 

 

 

53,300

50,000

25,000

 

53,300

50,000

25,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2016 after Z’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

Furniture

40,000

X

48,800

 

Sundry Debtors

44,000

 

Y

39,600

 

Less: 5% Provision for D. Debts

2,200

41,800

Z

19,400

1,07,800

Stock

20,000

General Reserve

14,000

Cash at Bank

22,000

Sundry Creditors

30,000

Cash in Hand (3,000 + 25,000)

28,000

 

1,51,800

 

1,51,800

 

 

 

 


Working Notes

WN1
Calculation of Sacrificing Ratio
Sacrificing Ratio = Old Ratio − New Ratio


WN2

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Z’s Capital A/c

Dr.

 

3,600

 

 

Y’s Capital A/c

Dr.

 

4,950

 

 

To X’s Capital A/c

 

 

8,550

 

(Adjustment of goodwill made)

 

 

 

 

 

 

 

 


WN3
Adjustment for General Reserve

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Y’s Capital A/c

Dr.

 

2,750

 

 

Z’s Capital A/c

Dr.

 

2,000

 

 

To X’s Capital

 

 

4,750

 

(General and Reserve adjusted among
partners in sacrificing and gaining ratio)

 

 

 

 

 

 

 

 



Page No 4.102:

Question 82:

Following is the Balance Sheet of Abha and Binay as at 31st March, 2014:

 

Liabilities

Assets

Creditors

13,000

Bank

15,000

Empolyees Provident Fund

8,000

Debtors

22,000

 

Workmen Compensation Fund

         

15,000

Less : Provision for D.D.

1,000

21,000

Capital A/cs:     Stock 10,000
 Abha 55,000   Plant and Machinery 60,000

Binay

30,000

85,000

Goodwill

 

10,000

    Profit and Loss 5,000
       
       

 

1,21,000

 

1,21,000

 

 

 

 

Chitra was admitted as a partner for 1/4th share in the profits of the firm . It was decided that:
(a)  Bad Debts amounted to ₹ 1,500 will be written off.
(b) Stock worth ₹ 8,000 was taken over by Abha and Binay at Book Value in their profit-sharing ratio. The remaining stock was valued at ₹ 2,500.
(c) Plant and Machinery and Goodwill were valued at ₹ 32,000 and ₹ 20,000 respectively.
(d) Chitra brought her share of goodwill in cash.
(e) Chitra will bring proportionate capital and the capitals of Abha and Binay will be adjusted in their profit-sharing ratio by bringing in or paying off cash as the case may be .
Prepare Revaluation Account and Partners' Capital Accounts.

Answer:

Revaluation Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Bad debts

500

Stock

500

Plant and Machinery

28,000

Loss on Revaluation

 

 

 

Abha’s Capital A/c

14,000

 

 

 

Binay’s Capital A/c

14,000

28,000

 

 

 

 

 

28,500

 

28,500

 

 

 

 


Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

Abha

Binay

Chitra

Particulars

Abha

Binay

Chitra

Revaluation

14,000

14,000

 

Balance b/d

55,000

30,000

 

Goodwill

5,000

5,000

 

Bank    

18,000

Profit and Loss

2,500

2,500

 

Premium for Goodwill

2,500

2,500

 

Stock 4,000 4,000   WCF 7,500 7,500  

Balance c/d

39,500

14,500

18,000

 

 

 

 

 

65,000

40,000

18,000

 

65,000

40,000

18,000

Bank

12,500

 

 

Balance c/d

39,500

14,500

18,000

Balance c/d (adjusted)

27,000

27,000

18,000

Bank

 

12,500

 

 

39,500

27,000

18,000

 

39,500

27,000

18,000

 

 

 

 

 

 

 

 


Working Notes:

WN1 Calculation of Chitra's Capital

Chitra's Capital=Total Adjusted Capital of Abha and Binay×Reciprocal of Combined Profit Share×Chitra's Profit ShareAbha's Adjusted Capital=55,000+2,500+7,500-14,000-5,000-2,500-4,000=Rs 39,500Binay's Adjusted Capital=30,000+2,500+7,500-14,000-5,000-2,500-4,000=Rs 14,500Chitra's Capital=(39,500+14,500)×43×14=Rs 18,000

WN2 Calculation of New Capital

New Capital=Total Adjusted Capital×Respective Partner's Profit ShareAbha's New Capital=(39,500+14,500)×12=Rs 27,000Binay's New Capital=(39,500+14,500)×12=Rs 27,000


WN3 Calculation of Chitra's Share of Goodwill

Chitra's Share=Firm's Goodwill×Chitra's Profit Share                          =20,000×14=Rs 5,000Rs 5,000 will be shared between Abha and Binay in sacrificing ratio 1:1 

Page No 4.102:

Question 83:

L , M and N were partners in a firm sharing profits in the ratio of 3 : 2 : 1 . Their Balance Sheet on 31st March, 2015 was as follows:

 

Liabilities

Assets

Creditors 1,68,000 Bank 34,000

General Reserve

42,000

Debtors

46,000

Capital's A/cs:

 

 

 

 

  L 1,20,000   Stock 2,20,000
  M 80,000   Investments 60,000

  N 

40,000

2,40,000

Furniture

20,000

 

 

 

Machinery

70,000

         
         
         

 

 

4,50,000

 

4,50,000

 

 

 

 

 


On the above date , O was admitted as a new partner and it was decided that:
(i) The new profit-sharing ratio between L, M , N and O will be 2 : 2 : 1 : 1 .
(ii) Goodwill of the firm was valued at ₹ 1,80,000 and O brought his share of goodwill premium in cash.
(iii) The market value of investments was ₹ 36,000.
(iv) Machinery will be reduced to ₹ 58,000.
(v) A creditor of ₹ 6,000 was not likely to claim the amount and hence was to be written off .
(vi) O will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm.

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Investments

24,000

Creditors

6,000

Machinery

12,000

Loss on Revaluation

 

 

 

  L’s Capital A/c

15,000

 

 

 

  M’s Capital A/c

10,000

 

 

 

  N’s Capital A/c

5,000

30,000

   

 

 

 

36,000

 

36,000

 

 

 

 

             

 

Partners’ Capital Account

Dr.

Cr.

Particulars

L

M

N

O

Particulars

L

M

N

O

Reval. A/c

15,000

10,000

5,000

 

Balance b/d

1,20,000

80,000

40,000

 

Balance c/d

1,56,000

84,000

42,000

56,400

Gen. Reserve

21,000

14,000

7,000

 

 

 

 

 

 

Premium for G/w

30,000

   

 

 

 

 

 

 

Cash A/c

 

 

 

56,400

 

 

 

 

 

 

 

 

 

 

 

1,71,000

94,000

47,000

56,400

 

1,71,000

94,000

47,000

56,400

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2015

Liabilities

Amount

(Rs)

Assets

Amount (Rs)

Creditors

1,62,000

Bank (34,000+56,400+30,000)

1,20,400

Capitals:

 

Debtors

46,000

     L

1,56,000

 

Stock

2,20,000

     M

84,000

 

Investments

36,000

     N

42,000

 

Furniture

20,000

     O

56,400

3,38,400

Machinery

58,000

 

5,00,400

 

5,00,400

 

Working Notes:
 

WN1: Calculation of Sacrificing Ratio



WN2: Adjustment of Goodwill



WN3 Calculation of O’s Proportionate Capital

Page No 4.102:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Revaluation A/c

Dr.

 

14,700

 

 

To Typewriter A/c

 

 

1,000

 

To Fixed Assets A/c

 

 

13,700

 

(Decrease in value of typewriter and fixed assets transferred to Revaluation Account)

 

 

 

 

 

 

 

 

 

Stationery A/c

Dr.

 

1,000

 

 

Investment A/c

Dr.

 

2,000

 

 

To Revaluation A/c

 

 

3,000

 

(Increase in stationery and investment transferred to Revaluation Account)

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

7,800

 

 

Y’s Capital A/c

Dr.

 

3,900

 

 

To Revaluation A/c

 

 

11,700

 

(Revaluation loss transferred to X and Y’s
Capital Account in their old ratio)

 

 

 

 

 

 

 

 

 

Reserve Fund A/c

Dr.

 

18,000

 

 

To X’s Capital A/c

 

 

12,000

 

To Y’s Capital A/c

 

 

6,000

 

(Reserve Fund distributed)

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

55,000

 

 

To Z’s Capital A/c

 

 

40,000

 

To Premium for Goodwill A/c

 

 

15,000

 

(Z brought capital and share of goodwill)

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

15,000

 

 

To X’s Capital A/c

 

 

10,000

 

To Y’s Capital A/c

 

 

5,000

 

(Premium for Goodwill distributed between X and Y in their sacrificing ratio i.e 2:1)

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

5,000

 

 

Y’s Capital A/c

Dr.

 

2,500

 

 

To Cash

 

 

7,500

 

(Half of the Premium for Goodwill withdrawn by X and Y)

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

10,000

 

 

To Investments A/c

 

 

10,000

 

(X took over the Investment)

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

4,800

 

 

To X’s Capital A/c

 

 

4,800

 

(X’ brought cash to make up deficiency in capital)

 

 

 

 

 

 

 

 

 

Y’s Capital A/c

Dr.

 

26,600

 

 

To Cash A/c

 

 

26,600

 

(Y withdrew excess capital after all adjustments)

 

 

 

 

 

 

 

 

 

Cash/Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

5,000

X’s Capital (Goodwill)

5,000

Z’s Capital

40,000

Y’s Capital (Goodwill)

2,500

Premium for Goodwill

15,000

Y’s Capital

26,600

X’s Capital

5,800

Balance c/d

31,700

 

65,800

 

65,800

 

 

 

 

 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Typewriter (5,000 × 20%)

1,000

Investment

2,000

Fixed Assets (1,37,000 × 10%)

13,700

Stationery

1,000

 

 

Loss transferred to

 

 

 

   X Capital

7,800

 

 

   Y Capital

3,900

 

14,700

 

14,700

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Revaluation

7,800

3,900

 

Balance b/d

75,000

62,000

 

Investment

10,000

 

 

Reserve Fund

12,000

6,000

 

Cash (withdraw of goodwill)

5,000

2,500

 

Cash

 

 

40,000

Balance c/d

74,200

66,600

40,000

Premium for Goodwill

10,000

5,000

 

 

97,000

73,000

40,000

 

97,000

73,000

40,000

Cash

 

26,600

 

Balance b/d

74,200

66,600

40,000

Balance c/d adjusted

80,000

40,000

40,000

Cash

5,800

 

 

 

80,000

66,600

40,000

 

80,000

66,600

40,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2017 after Z’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

25,000

Cash

31,700

Capital A/cs:

 

Sundry Debtors

15,000

X

80,000

 

Stock

10,000

Y

40,000

 

Typewriter (5,000 – 1,000)

4,000

Z

40,000

1,60,000

Fixed Assets (1,37,000 – 13,700)

1,23,300

 

 

Stationery

1,000

 

 

 

 

 

1,85,000

 

1,85,000

 

 

 

 


Working Notes:

WN1: Sacrificing Ratio


WN2: Distribution of Revaluation Loss


WN3: Distribution of Premium for Goodwill


WN4: Adjustment of Capital
Total Capital of the firm on the basis of Z’s share

Total Capital of the firm

=

1,60,000

Less: Z’s Capital

=

  40,000

Combined Capital of X and Y

=

1,20,000

 

 

 



Page No 4.103:

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant and Machinery (4,000 × 10%)

400

Stock (24,940 – 22,000)    

2,940

Provision for Bad Debts

500

 

 

Profit transferred to

 

 

 

A Capital

1,360

 

 

B Capital

680

 

 

 

2,940

 

2,940

 

 

 

 

 
Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

15,000

10,000

 

 

 

 

 

Cash

 

 

10,000

 

 

 

 

Premium for Goodwill

2,000

1,000

 

Balance c/d

18,360

11,680

10,000

Revaluation

1,360

680

 

 

18,360

11,680

10,000

 

18,360

11,680

10,000

Cash

 

1,680

 

Balance c/d

18,360

11,680

10,000

Balance c/d

20,000

10,000

10,000

Cash

1,640

 

 

(Adjusted)

 

 

 

 

 

 

 

 

20,000

11,680

10,000

 

20,000

11,680

10,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2017 after C’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

2,000

Cash

13,960

Bank Overdraft

15,000

Sundry Debtors

15,000

 

Capital A/cs:                               

 

Less: Prov. for Bad Debts

500

14,500

A

20,000

 

Stock

24,940

B

10,000

 

Plant and Machinery

3,600

C

10,000

40,000

 

 

 

 

 

 

 

 

57,000

 

57,000

 

 

 

 

 

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

1,000

B’s Capital

1,680

C’s Capital

10,000

 

 

Premium for Goodwill    

3,000

 

 

A’s Capital

1,640

Balance c/d                    

13,960

 

 

 

 

 

15,640

 

15,640

 

 

 

 


Working Notes

WN1: Sacrificing Ratio


WN2: Distribution of Premium for Goodwill


WN3: Distribution of Revaluation Profit


WN4: Adjustment of Capitals (in new ratio)

Page No 4.103:

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant and Machinery
(70,000 – 60,000)

10,000

Land and Building
(65,000 – 40,000)

25,000

Profit transferred to

 

Provision for Doubtful Debts

400

A Capital

12,450

Creditors

1,200

B Capital

4,150

 

 

 

 

 

 

 

26,600

 

26,600

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

50,000

80,000

 

 

 

 

 

General Reserve

7,500

2,500

 

 

 

 

 

Revaluation (Profit)

12,450

4,150

 

 

 

 

 

Cash

 

 

60,000

Balance c/d

74,450

88,150

60,000

Premium for Goodwill

4,500

1,500

 

 

74,450

88,150

60,000

 

74,450

88,150

60,000

 

 

 

 

 

 

 

 

B’s Current

 

43,150

 

Balance b/d

74,450

88,150

60,000

Balance c/d (Adjusted)

1,35,000

45,000

60,000

A’s Current

60,550

 

 

 

1,35,000

88,150

60,000

 

1,35,000

88,150

60,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2017 after C’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors (70,000 – 1,200)

68,800

Land and Building

65,000

Capital A/cs:

 

Plant and Machinery

60,000

A

1,35,000

 

Stock

30,000

B

45,000

 

Debtors

35,000

 

C

60,000

2,40,000

Less: Prov. for Doubtful Debts

600

34,400

B’s Current A/c

43,150

Investments

26,000

 

 

Cash

76,000

 

 

A’s Current A/c

60,550

 

 

 

 

 

3,51,950

 

3,51,950

 

 

 

 


Working Notes:

WN1


WN2 


WN3 Distribution of Revaluation Profit


WN4 Adjustment of Capital
 

Total Capital of the firm after C’s admission

=

60,000 × 4

=

2,40,000

Less: C’s Capital

 

 

=

60,000

Combined Capital of A and B

 

 

=

1, 80,000



WN5

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

10,000

 

 

C’s Capital

60,000

Balance c/d

76,000

Premium for Goodwill

6,000

       (Balancing Figure)

 

 

76,000

 

76,000

 

 

 

 



Page No 4.104:

Question 87:

A and B are partners in a firm sharing profits and losses in the ratio 3 : 1 . They admit C for 1/4th share on 31st March, 2014 when their Balance Sheet was as follows:

 

Liabilities

Assets

Employees Provident Fund 17,000 Cash 6,100

Workmen Compensation Reserve

6,000

Stock

15,000

Investments Fluctuation Reserve

4,100

Debtors

50,000

 

 

         

 

Less : Provision for D.D.

2,000

48,000

Capital A/cs:

 

 

 










Investments
 

 

 

A
54,000   Goodwill 7,000

B

35,000

89,000

 

 

40,000

       
       

 

1,16,100

 

1,16​,100

 

 

 

 


The following adjustments were agreed upon:
(a) C brings ₹ 16,000 as goodwill and proportionate capital.
(b) Bad Debts amounted to ₹ 3,000.
(c) Market value of Investments is ₹ 4,500.
(d) Liability on account of workmen compensation reserve amounted to ₹ 2,000.
Prepare Revaluation Account and Partners' Capital Accounts.

Answer:

Revaluation Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Bad debts

1,000

   
   

Loss on Revaluation

 

 

 

A's Capital A/c

750

 

 

 

B’s Capital A/c

250

1,000

 

 

 

 

 

1,000

 

1,000

 

 

 

 


Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

Revaluation

750

250

 

Balance b/d

54,000

35,000

 

Goodwill

30,000

10,000

 

Bank    

23,200

     

 

Premium for Goodwill

12,000

4,000

 

        WCF 3,000 1,000  

Balance c/d

39,450

30,150

23,200

IFF

1,200

400

 

 

70,200

40,400

23,200

 

70,200

40,400

23,200

 

 

 

 

 

 

 

 


Working Notes:

WN1 Calculation of C's Capital

C's Capital=Total Adjusted Capital of A and B×Reciprocal of Combined Profit Share×C's Profit ShareA's Adjusted Capital=54,000+12,000+3,000+1,200-750-30,000=Rs 39,450B's Adjusted Capital=35,000+4,000+1,000+400-250-10,000=Rs 30,150C's Capital=(39,450+30,150)×43×14=Rs 23,200
Notes:
1. Premium for Goodwill Rs 16,000 will be distributed between A and B in sacrificing ratio i.e. 3 : 1.
2. Excess WCF of Rs 4,000 will be shared in old ratio among old partners.
3. Excess IFF of Rs 1,600 will be shared in old ratio among old partners.

Page No 4.104:

Answer:

 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

27,400

Land and Building

35,000

Furniture

16,000

Plant and Machinery

6,750

Investments

7,300

Loss transferred to:

 

   

X

4,475

 

 

 

Y

2,983

 

 

 

Z

1,492

8,950

 

50,700

 

50,700

 

 

 

 

 

Partners’ Current Account

Dr.

Cr.

Particulars

X Y Z

Particulars

X Y Z

Balance b/d

 

7,000

 

Balance b/d

4,000

 

6,000

Revaluation (Loss)

4,475

2,983

1,492

General Reserve

7,500

5,000

2,500

 

 

 

 

Profit and Loss A/c

3,500

2,333

1,167

Balance c/d

100,525

47,350

83,175

Premium for Goodwill

15,000

 

 

 

 

 

 

Capital A/c

75,000

50,000

75,000

 

1,05,000

57,333