Double Entry Book Keeping Ts Grewal (2016) Solutions for Class 12 Commerce Accountancy Chapter 5 Change In Profit Sharing Ratio are provided here with simple step-by-step explanations. These solutions for Change In Profit Sharing Ratio are extremely popular among class 12 Commerce students for Accountancy Change In Profit Sharing Ratio Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the Double Entry Book Keeping Ts Grewal (2016) Book of class 12 Commerce Accountancy Chapter 5 are provided here for you for free. You will also love the ad-free experience on Meritnation’s Double Entry Book Keeping Ts Grewal (2016) Solutions. All Double Entry Book Keeping Ts Grewal (2016) Solutions for class 12 Commerce Accountancy are prepared by experts and are 100% accurate.

Page No 5.28:

Answer:

Old Ratio = 2 : 2 : 1

Case 1:If C acquires 1/5th share from B

Calculation of New Profit RatioA = 25 B= 2515 = 15 C= 15 + 15 =  2 5New Ratio = 2 : 1 : 2 Calculation of Sacrificing or Gaining RatioSacrificing Ratio = Old RatioNew RatioA = 25 -25 = 0 B= 2515 = 15(Sacrifice)C= 15    25=15 (Gain)

Case 2: If C acquires 1/5th share equally from A and B

Calculation of New Profit RatioA=25110=4110=310B=25110=4110=310 C=15+210=2+210=4 10New Ratio = 3 : 3 : 4 Calculation of Sacrificing or Gaining RatioSacrificing Ratio = Old RatioNew RatioA=25310=4310=110  (Sacrifice)B=25310=4310=110 (Sacrifice)C=15410=2410=210 (Gain)

Case 3: If A, B and C decide to share future profits and losses equally

Calculation of Sacrificing or Gaining RatioSacrificing Ratio=Old RatioNew RatioA=2513=6515=115 (Sacrifice)B=2513=6515=115 (Sacrifice)C=1513=3515=215 (Gain)


Case 4: If A, B and C decide to share future profits and losses in the ratio of 2 : 1 : 2

Calculation of Sacrificing or Gaining RatioSacrificing Ratio=Old RatioNew RatioA=2525 = 0 B=2515 = 15(Sacrifice)C=1525 =15 (Gain)

Page No 5.28:

Answer:

Old Ratio (X, Y and Z) = 5 : 3 : 2

New Ratio (X, Y and Z) = 1 : 1 : 1

Sacrificing (or Gaining) Ratio = Old Ratio − New Ratio

 

Y’s Gain = 1/30

Z’s Gain = 4/30

X’s Sacrifice = 5/30

Page No 5.28:

Answer:

Journal
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
2016
         
April 01
         
Case 1
B’s Capital A/c
Dr.
 
1,800
 
 
C’s Capital A/c
Dr.
 
7,200
 
 
  To A’s Capital A/c
     
9,000
 
(Adjustment entry made for goodwill)
       
           
Case 2
A’s Capital A/c
Dr.
 
27,000
 
 
B’s Capital A/c
Dr.
 
16,200
 
 
C’s Capital A/c
Dr.
 
10,800
 
 
  To Goodwill A/c
     
54,000
 
(Existing goodwill written-off)
       
           
 
B’s Capital A/c
Dr.
 
1,800
 
 
C’s Capital A/c
Dr.
 
7,200
 
 
  To A’s Capital A/c
     
9,000
 
(Adjustment entry made for goodwill)
       
         

Working Notes:

WN1: Calculation of Sacrificing or Gaining Ratio

Sacrificing Ratio = Old Ratio - New RatioX = 510  13 =  15  1030 = 530 (Sacrifice)Y = 310  13 =  9  1030 =  130 (Gain)Z = 210  13 =  6  1030 =  430 (Gain)

WN2: Calculation of Share in Goodwill

A's Share in Goodwill  = 54,000 × 530 = Rs 9,000B's Share in Goodwill  = 54,000 × 130 = Rs1,800C's Share in Goodwill  = 54,000 × 430 = Rs 7,200



Page No 5.29:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

C’s Capital A/c  

Dr.

 

3,000

 

 

To A’s Capital A/c

 

 

 

3,000

 

(Adjustment of goodwill made on change in profit sharing ratio)

 

 

 

 

 

 

 

 

Working Notes:

Old Ratio (A, B and C) = 3 : 2 : 1

New Ratio (A, B and C) = 1 : 1 : 1

Sacrificing (or Gaining) Ratio = Old Ratio − New Ratio

Goodwill of the firm = Rs 18,000

A will receive for goodwill =

C will give for goodwill =

Page No 5.29:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

A’s Capital A/c

Dr.

 

6,000

 

 

To B’s Capital A/c

 

 

6,000

 

(Adjustment of profit for 2015-16 on change in

profit sharing ratio)

 

 

 

 

 

 

 

 

 

B’s Capital A/c

Dr.

 

9,000

 

 

To A’s Capital A/c

 

 

9,000

 

(Adjustment of goodwill made on change in profit sharing ratio)

 

 

 

 

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

Cr.

Particulars

A

Rs

B

Rs

Particulars

A

Rs

B

Rs

B's Capital A/c

6,000

Balance b/d

1,50,000

90,000

(Adjustment of profit)

 

 

A's Capital A/c

6,000

A's Capital A/c

9,000

(Adjustment Profit)

 

 

(Adjustment of Goodwill)

 

 

B's Capital A/c

9,000

Balance c/d

1,53,000

87,000

(Adjustment of Goodwill)

 

 

 

1,59,000

96,000

 

1,59,000

96,000

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (A and B) = 2 : 1

New Ratio (A and B) = 3 : 2

Sacrificing (or Gaining) Ratio = Old Ratio − New Ratio

WN 2 Adjustment of Profit for 2015-16

WN 3 Calculation of New Goodwill

Goodwill = Profit of 2011-12 + Profit of 2012-13               = 60,000 + 75,000 = Rs 1,35,000

 

WN 4 Adjustment of Goodwill

Page No 5.29:

Answer:

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
2016          
Apr. 01 General Reserve A/c Dr.  
36,000
 
   Profit & Loss A/c Dr.  
72,000
 
    To X’s Capital A/c 1,08,000×36      
54,000
    To Y’s Capital A/c 1,08,000×26      
36,000
    To Z’s Capital A/c 1,08,000×16      
18,000
  (Distributed balance of general reserve & profit & loss in old profit sharing ratio)        
         

Page No 5.29:

Answer:

Journal
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
 
A’s Capital A/c Dr.  
18,000
 
 
B’s Capital A/c Dr.  
12,000
 
 
  To Profit & Loss A/c      
30,000
 
(Distributed debit balance of Profit & Loss Account in old profit sharing ratio)      
 
       

Page No 5.29:

Answer:

Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit Amount (Rs)
2014          
Apr. 01 C’s Capital A/c Dr.  
9,000
 
    To A’s Capital A/c      
4,500
    To B’s Capital A/c      
4,500
  (Adjustment entry made for credit balance of Profit and Loss Account)        
         

Working Notes:

WN1: Calculation of Sacrificing or Gaining Ratio

Sacrificing Ratio=Old RatioNew RatioA=3813=124 (Sacrifice)B=3813=124 (Sacrifice)C=2813=224 (Gain)

WN2: Calculation of Share of Goodwill

A's Share in Goodwill=1,08,000×124=Rs 4,500B's Share in Goodwill=1,08,000×124=Rs 4,500C's Share in Goodwill=1,08,000×224=Rs 9,000

Page No 5.29:

Answer:

Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit Amount (Rs)
2016          
Apr. 01          
Case 1 Workmen Compensation Reserve A/c Dr.  
12,000
 
    To X’s Capital A/c      
6,000
    To Y’s Capital A/c      
3,600
    To Z’s Capital A/c      
2,400
  (Distributed workmen compensation reserve in old ratio)        
           
Case 2 Workmen Compensation Reserve A/c Dr.  
12,000
 
    To Provision for Workmen Compensation Claim A/c      
1,500
    To X’s Capital A/c      
5,250
    To Y’s Capital A/c      
3,150
    To Z’s Capital A/c      
2,100
  (Provision created and excess amount is distributed among the partners in old ratio)      
           
Case 3 Workmen Compensation Reserve A/c Dr.  
12,000
 
  Revaluation A/c    
10,000
 
    To Provision for Workmen Compensation Claim A/c      
22,000
  (Created provision for workmen compensation reserve)        
           
  X’s Capital A/c Dr.  
5,000
 
  Y’s Capital A/c Dr.  
3,000
 
   Z’s Capital A/c Dr.  
2,000
 
    To Revaluation A/c      
10,000
  (Transferred loss of revaluation to Partners’ Capital Account in old ratio)        
         

Page No 5.29:

Answer:

Journal
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
2016
         
April 01
         
Case:
Workmen Compensation Reserve A/c Dr.  
12,000
 
 
  To Liability for Workmen Compensation A/c      
1,500
 
  To X’s Capital A/c      
5,250
 
  To Y’s Capital A/c      
3,150
 
  To Z’s Capital A/c      
2,100
 
(Transferred to liability and excess amount is transferred to partners’ capital account in old ratio)      
 
         
Case: 2
Workmen Compensation Reserve A/c Dr.  
12,000
 
 
Revaluation A/c    
10,000
 
 
  To Liability for Workmen Compensation A/c      
22,000
 
(Transferred liability of workmen compensation reserve)      
 
         
 
X’s Capital A/c Dr.  
5,000
 
 
Y’s Capital A/c Dr.  
3,000
 
 
 Z’s Capital A/c Dr.  
2,000
 
 
  To Revaluation A/c      
10,000
 
(Transferred loss of revaluation to Partners’ Capital Account)        
 
       



Page No 5.30:

Answer:

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
2016          
Apr. 01          
Case 1 Investment Fluctuation Reserve A/c Dr.  
10,000
 
    To X’s Capital A/c      
5,000
    To Y’s Capital A/c      
3,000
    To Z’s Capital A/c      
2,000
  (Distributed investment fluctuation reserve in old ratio)      
           
Case 2 Investment Fluctuation Reserve A/c Dr.  
10,000
 
    To X’s Capital A/c      
5,000
    To Y’s Capital A/c      
3,000
    To Z’s Capital A/c      
2,000
  (Distributed investment fluctuation reserve in old ratio)      
           
Case 3 Investment Fluctuation Reserve A/c Dr.  
10,000
 
    To Investments A/c      
5,000
    To X’s Capital A/c      
2,500
    To Y’s Capital A/c      
1,500
    To Z’s Capital A/c      
1,000
  (Transferred to investments and distributed excess amount in old ratio)      
           
Case 4 Investment Fluctuation Reserve A/c Dr.  
10,000
 
  Revaluation A/c Dr.  
5,000
 
     To Investments A/c      
15,000
  (Amount transferred to Investments Account)      
           
  X’s Capital A/c Dr.  
2,500
 
  Y’s Capital A/c Dr.  
1,500
 
   Z’s Capital A/c Dr.  
1,000
 
    To Revaluation A/c      
5,000
  (Revaluation loss transferred to Partners’ Capital Account in old ratio)      
           
Case 5 Investment Fluctuation Reserve A/c Dr.  
10,000
 
    To X’s Capital A/c      
    5,000
    To Y’s Capital A/c                3,000
    To Z’s Capital A/c      
2,000
  (Distributed investment fluctuation reserve in old ratio)      
           
  Investments A/c Dr.  
10,000
 
     To Revaluation A/c      
10,000
  (Profit on revaluation of investments transferred to Revaluation A/c)        
           
  Revaluation A/c Dr.  
10,000
 
    To X’s Capital A/c      
5,000
    To Y’s Capital A/c      
3,000
    To Z’s Capital A/c      
2,000
  (Distributed profit on revaluation among the partners in old ratio)        
         

Page No 5.30:

Answer:

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
1 X’s Capital A/c Dr.  
12,000
 
  Y’s Capital A/c Dr.  
8,000
 
  Z’s Capital A/c Dr.  
4,000
 
    To Goodwill A/c      
24,000
  (Goodwill written-off among the partners in old ratio)        
           
2 X’s Capital A/c Dr.  
18,000
 
  Y’s Capital A/c Dr.  
12,000
 
  Z’s Capital A/c Dr.  
6,000
 
    To Profit & Loss A/c      
36,000
  (Loss is distributed among partners in old ratio)        
           
3 General Reserve A/c Dr.  
60,000
 
    To X’s Capital A/c      
30,000
    To Y’s Capital A/c      
20,000
    To Z’s Capital A/c      
10,000
  (Distributed General Reserve in old ratio)        
           
4 Workmen Compensation Reserve A/c Dr.  
30,000
 
      To Liability against Workmen Compensation Reserve A/c    
12,000
      To X’s Capital A/c    
9,000
      To Y’s Capital A/c    
6,000
      To Z’s Capital A/c    
3,000
  (Liability against workmen compensation reserve is transferred and distributed excess reserve in old ratio)      
           
5 Z’s Capital A/c Dr.  
30,000
 
    To X’s Capital A/c      
30,000
  (Goodwill adjusted through partners’ capital accounts in sacrificing or gaining ratio)      

Working Notes: Calculation of Sacrificing or Gaining Ratio

Sacrificing Ratio=Old RatioNew RatioX=3613=3  26=16 (Sacrifice)Y=2613=2  26=0Z=1613=1  26=16 (Gain) X's and Z's Share of Goodwill= 1,80,000 × 16=Rs 30,000

Page No 5.30:

Answer:

Journal
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
1
Workmen Compensation Reserve A/c Dr.  
25,000
 
 
  To Claim against Workmen Compensation Reserve A/c    
5,000
 
  To A’s Capital A/c      
10,000
 
  To B’s Capital A/c      
6,000
 
  To C’s Capital A/c      
4,000
 
(Claim against workmen compensation reserve is transferred and distributed excess reserve in old ratio)      
 
         
2.
Investment Fluctuation Reserve A/c Dr.  
15,000
 
 
  To Investments A/c      
5,000
 
  To A’s Capital A/c      
5,000
 
  To B’s Capital A/c      
3,000
 
  To C’s Capital A/c      
2,000
 
(Transferred and distributed Investment Fluctuation Reserve in old ratio)      
 
         
3
General Reserve A/c Dr.  
50,000
 
    To A’s Capital A/c      
25,000
 
  To B’s Capital A/c      
15,000
 
  To C’s Capital A/c      
10,000
 
(Distributed general reserve in old ratio)        
 
         
4
Profit & Loss A/c Dr.  
40,000
 
 
  To A’s Capital A/c      
20,000
 
  To B’s Capital A/c      
12,000
 
  To C’s Capital A/c      
8,000
 
(Distributed profits in old ratio)        
 
         
5
A’s Capital A/c Dr.  
10,000
 
 
B’s Capital A/c Dr.  
6,000
 
 
C’s Capital A/c Dr.  
4,000
 
 
  To Advertisement Expenses A/c      
20,000
 
(Deferred revenue expenditure distributed among the partners in old ratio)        
 
       

Page No 5.30:

Answer:

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
  Investment Fluctuation Reserve  A/c Dr.  
15,000
 
  Revaluation A/c Dr.  
35,000
 
    To Investments A/c      
50,000
  (Transferred fall in the value of investments from reserve and revaluation)        
           
  X’s Capital A/c Dr.  
17,500
 
  Y’s Capital A/c Dr.  
10,500
 
  Z’s Capital A/c Dr.  
7,000
 
    To Revaluation A/c      
35,000
  (Transferred loss on revaluation of investments to partners’ capital accounts)        
           
  Workmen Compensation Reserve A/c Dr.  
25,000
 
    To Claim for Workmen Compensation Reserve A/c    
5,000
    To X’s Capital A/c      
10,000
    To Y’s Capital A/c      
6,000
    To Z’s Capital A/c      
4,000
  (Transferred to Claim and distributed excess reserve in old ratio)        
           
  General Reserve A/c Dr.  
1,50,000
 
    To X’s Capital A/c      
75,000
    To Y’s Capital A/c      
45,000
    To Z’s Capital A/c      
30,000
  (Distributed general reserve among partners in old ratio)        
           
  Profit & Loss A/c Dr.  
20,000
 
    To X’s Capital A/c      
10,000
    To Y’s Capital A/c      
6,000
    To Z’s Capital A/c      
4,000
  (Distributed profits among partners in old ratio)        
         



Page No 5.31:

Answer:

Journal
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
2016
         
Apr. 01
Revaluation A/c Dr.  
28,600
 
 
  To Stock A/c        
10,000
 
  To Machinery A/c        
15,900
 
  To Provision for Doubtful Debts A/c        
2,700
 
(Value of assets decreased and provision is created for debtors)        
 
         
Apr. 01
Land & Building A/c Dr.  
40,000
 
 
Creditors A/c Dr.  
3,000
 
 
  To Revaluation A/c      
43,000
 
(Value of Land & Building and creditors increased)      
 
         
Apr. 01
Revaluation A/c Dr.  
14,400
 
 
  To A’s Capital A/c      
5,400
 
  To B’s Capital A/c      
5,400
 
  To C’s Capital A/c      
3,600
 
(Profit made on revaluation transferred to Partners’ Capital Account)        
 
         
Apr. 01
A’s Capital A/c Dr.  
9,000
 
 
B’s Capital A/c Dr.  
9,000
 
 
C’s Capital A/c Dr.  
6,000
 
 
  To Advertisement Expenditure A/c      
24,000
 
(Distributed deferred revenue expenditure)        
 
         
Apr. 01
A’s Capital A/c 72,000 ×572 Dr.  
5,000
 
 
  To B’s Capital A/c 72,000 ×372      
3,000
 
  To C’s Capital A/c 72,000 ×272      
2,000
 
(Adjustment entry made for general reserve through partners’ capital accounts)        
 
       

Working Notes:

WN1:  Calculation of Sacrificing or Gaining Ratio

Sacrificing Ratio=Old Ratio  New RatioA=3849=572 (Gain)B=3839=372 (Sacrifice)C=2829=272  (Sacrifice)

Page No 5.31:

Answer:

(i) If revised values are not to be shown in the books
 

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
  Z’s Capital A/c Dr.  
10,500
 
    To X’s Capital A/c      
10,500
  (Revaluation adjusted through capitals)        
         

Working Notes:

WN1: Calculation of Sacrificing or Gaining Ratio

Sacrificing Ratio=Old RatioNew RatioX=510210=5  210=310 (Sacrifice)Y=310310=3  310=0Z=210510=2  510=310 (Gain) 

WN2 Calculation of Profit or Loss on Revaluation
 
Increase in value of Land & Building =
50,000
Decrease in value of Creditors =
10,000
Less: Decrease in value of P & M
=
10,000
Less: Increase in O/s Expenses
=
15,000
Profit on Revaluation =
Rs 35,000

X's and Z's share in Revaluation = 35,000×310= Rs 10,500

(ii) If revised values are to be shown in the books
 
Journal
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
 
Revaluation A/c Dr.  
10,000
 
 
  To Plant & Machinery A/c      
10,000
 
(Decrease in the value of plant & machinery)        
 
         
 
Land & Building A/c Dr.  
50,000
 
 
  To Revaluation A/c      
50,000
 
(Increase in the value of Land & Building)        
           
  Trade Creditors A/c Dr.  
10,000
 
 
  To Revaluation A/c      
10,000
 
(Decrease in the value of creditors)        
 
         
 
Revaluation A/c Dr.  
15,000
 
 
  To Outstanding Expenses A/c      
15,000
 
(Increase in Outstanding expenses)        
 
         
  Revaluation A/c Dr.  
35,000
 
 
  To X’s Capital A/c      
17,500
 
  To Y’s Capital A/c      
10,500
 
  To Z’s Capital A/c      
7,000
 
(Profit on revaluation transferred to Partners’ Capital Accounts)        
 
       



Page No 5.32:

Answer:

Journal
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
2016
White’s Capital A/c 80,000 ×15 Dr.  
16,000
 
Apr. 01
  To Black’s Capital A/c 80,000 ×15      
16,000
 
(Adjustment entry made for change in ratio)        
 
       

Working Notes:

WN1:  Calculation of Sacrificing or Gaining Ratio

Black=3525=15 SacrificeWhite=2535=15Gain  

WN
2
:  Calculation of amount to be distributed

General Reserve=30,000Goodwill=50,000Total= Rs 80,000

Page No 5.32:

Answer:

Revaluation Account
Particulars
Amount
(Rs)
Particulars
Amount (Rs)
Provision for Doubtful Debts
10,000
Land & Building
1,50,000
Depreciation on Furniture
50,000
   
Profit transferred to:      
X’s Capital A/c
60,000
     
Y’s Capital A/c
30,000
90,000
   
       
 
1,50,000
 
1,50,000
       

Partners’ Capital Accounts
Dr.    
Cr.
Date
Particulars
X
Y
Date
Particulars
X
Y
2016
     
2016
     
April 01 Balance c/d
7,10,000
3,80,000
April 01
Balance b/d
6,50,000
3,50,000
          Revaluation A/c
60,000
30,000
   
7,10,000
3,80,000
   
7,10,000
3,80,000
               

Page No 5.32:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

A’s Capital A/c

Dr.

 

4,000

 

 

To B’s Capital A/c

 

 

 

4,000

 

(Adjustment of General Reserve on change in profit sharing ratio)

 

 

 

 

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

A

B

Particulars

A

B

B’s Capital A/c

4,000

Balance b/d

2,40,000

1,20,000

(Adjustment of General Reserve)

 

 

Revaluation (Profit)

18,000

13,500

Balance c/d

2,54,000

1,37,500

A’s Capital A/c

4,000

 

 

 

(Adjustment of General Reserve)

 

 

 

2,58,000

1,37,500

 

2,58,000

1,37,500

 

 

 

 

 

 

 

Balance Sheet

Liabilities

Amount Rs

Assets

Amount Rs

Sunday Creditors (28,000 –3,700)

24,300

Cash

20,000

General Reserve

42,000

Sundry Debtors

1,20,000

 

Capital Account

 

Less: Provision for Doubtful Debts

(7,200)

1,12,800

A

2,54,000

 

Stock

1,90,000

B

1,37,500

3,91,500

Fixed Assets (1,50,000 – 15,000)

1,35,000

 

4,57,800

 

4,57,800

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (A and B) = 4 : 3

New Ratio (A and B) = 2 : 1

Sacrificing (or Gaining) Ratio = Old Ratio − New Ratio

WN 2 Adjustment of General Reserve

WN 3

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Fixed Assets

15,000

Stock

50,000

Provision for Doubtful Debts

(1,20,000 × 6%)

7,200

Creditors

3,700

Profit transferred to:

 

 

 

A’s Capital A/c

18,000

 

 

 

B’s Capital A/c

13,500

31,500

 

 

 

53,700

 

53,700

 

 

 

 

 



Page No 5.33:

Answer:

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
Y’s Capital
10,000
Balance b/d
6,00,000
4,00,000
2,00,000
Z’s Capital
5,000
X’s Capital
10,000
5,000
Balance c/d
5,85,000
4,10,000
2,05,000
       
 
6,00,000
4,10,000
2,05,000
 
6,00,000
4,10,000
2,05,000
               

Revised Balance Sheet
as at April 01, 2016
Liabilities
Amount
(Rs)
Assets
Amount (Rs)
Capital :   Land & Building
7,00,000
X
5,85,000
  Plant & Machinery
3,00,000
Y
4,10,000
  Stock
2,00,000
Z
2,05,000
12,00,000
Debtors
70,000
Creditors
1,00,000
Cash at Bank
30,000
 
13,00,000
 
13,00,000
       

Working Notes:

WN1: Calculation of Sacrificing or Gaining Ratio

Sacrificing Ratio=Old RatioNew RatioX=2536=12  1530=330 (Gain) Y=2526=12  1030=230 (Sacrifice)Z=1516=6  530=130 (Sacrifice)


WN2: Calculation of Profit or Loss on Revaluation

Plant & Machinery
=
Rs 30,000
Land & Building
=
Rs 1,50,000
Stock
=
Rs (30,000)
Total
=
Rs 1,50,000

​​X will pay = 1,50,000 ×330= Rs 15,000Y will get = 1,50,000 ×230= Rs 10,000Z will get = 1,50,000 ×130= Rs 5,000

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
  X’s Capital A/c Dr.  
15,000
 
    To Y’s Capital A/c      
10,000
    To Z’s Capital A/c      
5,000
  (Adjustment entry made for change in ratio)        
         

Page No 5.33:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

A's Capital A/c

Dr.

 

2,500

 

 

To C's Capital A/c

 

 

 

2,500

 

(Revaluation Profit and General Reserve adjusted on change in profit sharing ratio)

 

 

 

 

 

 

 

 

 

Balance Sheet

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

40,000

Cash at Bank

40,000

Outstanding Expenses

15,000

Sundry Debtors

2,10,000

General Reserve

75,000

Stock

3,00,000

Capital Accounts:

 

Furniture

60,000

A

3,97,500

 

Plant and Machinery

4,20,000

B

3,00,000

 

 

 

C

2,02,500

9,00,000

 

 

 

10,30,000

 

10,30,000

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (A, B and C) = 5 : 4 : 3

New Ratio (A, B and C) = 4 : 3 : 2

Sacrificing (or Gaining) Ratio = Old Ratio − New Ratio

A's Share = 512-49=15-1636=-136(Gain)B's Share = 412-39=12-1236=NilC's Share = 312-29=9-836=136(Sacrifice)

 

WN 2 Calculation of Profit or Loss on Revaluation

Particulars

Amount (Rs)

Increase in Stock

  60,000

(Cr.)

Decrease in Furniture

(12,000)

(Dr.)

Decrease in Plant and Machinery

(20,000)

(Dr.)

Increase in Provision for Debtors (10,000) (Dr.)  

Increase in Outstanding Expenses

(3,000)

(Dr.)

Profit on Revaluation

  15,000

(Cr.)

 

 

 

WN 3 Adjustment of Profit on Revaluation and General Reserve

Amount for Adjustment = Profit on Revaluation + General Reserve = 15,000 + 75,000 = Rs 90,000

Amount to be debited to A's Capital = 90,000 × 136= Rs 2,500Amount to be credited to C's Capital = 90,000 × 136= Rs 2,500

 

WN 4

Partners’ Capital Accounts

Dr.

Cr.

Particulars

A

B

C

Particulars

A

B

C

C's Capital A/c

     2,500

Balance c/d

4,00,000

3,00,000

2,00,000

 

 

 

 

A's Capital A/c

     2,500

Balance c/d

3,97,500

3,00,000

2,02,500

 

 

 

 

 

4,00,000

3,00,000

2,02,500

 

4,00,000

3,00,000

2,02,500

 

 

 

 

 

 

 

 

 



Page No 5.34:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2016

 

 

 

 

 

March 31

X’s Capital A/c

Dr.

 

20,000

 

 

Y’s Capital A/c

Dr.

 

30,000

 

 

Z’s Capital A/c

Dr.

 

10,000

 

 

   To Goodwill A/c

 

 

 

60,000

 

(Existing goodwill written-off)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

1,55,000

 

 

  To Y’s Capital A/c

 

 

 

1,55,000

 

(Goodwill adjusted by debiting gaining partner and crediting sacrificing partner)

 

 

 

 

 

 

 

 

 

 

Land and Building A/c

Dr.

 

1,25,000

 

 

  To Revaluation A/c

 

 

 

1,25,000

 

(Increase in value of land & building recorded in Revaluation Account)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

67,500

 

 

  To Stock A/c

 

 

 

40,000

 

  To Provision for Doubtful Debts A/c

 

 

 

27,500

 

(Decrease in value of stock and increase in provision for doubtful debts, recorded in revaluation)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

57,500

 

 

   To X’s Capital A/c

 

 

 

19,167

 

   To Y’s Capital A/c

 

 

 

28,750

 

   To Z’s Capital A/c

 

 

 

9,583

 

(Profit on revaluation transferred to Partners’ Capital Accounts in old profit sharing ratio of 2 : 3 : 1)

 

 

 

 

 

 

 

 

 

 

 

Workmen Compensation Reserve A/c

Dr.

 

1,00,000

 

 

   To Workmen Compensation Claim A/c

 

 

 

40,000

 

   To X’s Capital A/c

 

 

 

20,000

 

   To Y’s Capital A/c

 

 

 

30,000

 

   To Z’s Capital A/c

 

 

 

10,000

 

(Excess balance of WCR transferred to partners’ capital account)

 

 

 

 

 

 

 

 

 

 

 

Investments Fluctuation Reserve A/c

Dr.

 

50,000

 

 

   To Investments A/c

 

 

 

20,000

 

   To X’s Capital A/c

 

 

 

10,000

 

   To Y’s Capital A/c

 

 

 

15,000

 

   To Z’s Capital A/c

 

 

 

5,000

 

(Decrease in market value of investments settled through IFF and excess balance is transferred to partners’ capital accounts)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

20,000

 

 

Y’s Capital A/c

Dr.

 

30,000

 

 

Z’s Capital A/c

Dr.

 

10,000

 

 

  To Advertisement A/c

 

 

 

60,000

 

(Balance of Advertisement Suspense Account is debited to Partners’ Capital Account)

 

 

 

 

 

 

 

 

 

 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

40,000

Land and Building

1,25,000

Provision for Doubtful Debts

27,500

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

19,167

 

 

 

Y’s Capital A/c

28,750

 

 

 

Z’s Capital A/c

9,583

57,500

 

 

 

1,25,000

 

1,25,000

 

 

 

 

             

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

1,55,000

 

 

Balance b/d

5,00,000

10,00,000

15,00,000

Advertisement Suspense A/c

20,000

30,000

10,000

Revaluation A/c

19,167

28,750

9,583

Goodwill A/c

20,000

30,000

10,000

Workmen Compensation Reserve

20,000

30,000

10,000

Balance c/d

3,54,167

11,68,750

15,04,583

Investment Fluctuation Reserve

10,000

15,000

5,000

 

 

 

 

X’s Capital A/c

 

1,55,000

 

 

 

 

 

 

 

 

 

 

5,49,167

12,28,750

15,24,583

 

5,49,167

12,28,750

15,24,583

 

 

 

 

 

 

 

 

                 

 

Balance Sheet

as at March 31, 2016

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

Investments

2,30,000

X

3,54,167

 

Land and Building

12,50,000

 

Y

11,68,750

 

Add: Undervaluation

1,25,000

13,75,000

Z

15,04,583

30,27,500

Stock

        4,00,000

 

Workmen Compensation Claim

40,000

Less: Overvaluation

   40,000

3,60,000

Employees Provident Fund

50,000

Debtors

      15,50,000

 

Creditors

18,00,000

Less: Prov. For D/D

  77,500

14,72,500

 

 

Bank

14,80,000

 

49,17,500

 

49,17,500

 

 

 

 

Working Notes:

WN 1: Calculation of sacrificing/gaining ratio

WN 2: Calculation of goodwill

 



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