Double Entry Book Keeping Ts Grewal (2016) Solutions for Class 12 Commerce Accountancy Chapter 6 Retirement And Death Of A Partner are provided here with simple step-by-step explanations. These solutions for Retirement And Death Of A Partner are extremely popular among class 12 Commerce students for Accountancy Retirement And Death Of A Partner 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 6 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 6.100:

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

10,000

 

To Machinery A/c

 

 

10,000

(Decrease in value of Machinery transferred to Revaluation Account)

 

 

 

 

 

 

 

Patents A/c

Dr.

 

10,000

 

Leasehold A/c

Dr.

 

25,000

 

To Revaluation A/c

 

 

35,000

(Increase in value Patents and Leasehold transferred to Revaluation Account)

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

25,000

 

To R’s Capital A/c

 

 

12,500

To S’s Capital A/c

 

 

7,500

To T’s Capital A/c

 

 

5,000

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

R’ Capital A/c

Dr.

 

12,500

 

S’s Capital A/c

Dr.

 

7,500

 

T’s Capital A/c

Dr.

 

5,000

 

To Goodwill A/c

 

 

25,000

(Goodwill written off among partners in their old ratio)

 

 

 

 

 

 

 

R’s Capital A/c

Dr.

 

21,875

 

S’s Capital A/c

Dr.

 

13,125

 

To T’s Capital A/c

 

 

35,000

(T’s share of goodwill adjusted)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

5,000

 

  To T’s Capital A/c

 

 

5,000

(T’s share of profit transferred to his capital account)

 

 

 

 

 

 

 

Workmen’s Compensation Reserve A/c

Dr.

 

30,000

 

To R’s Capital A/c

 

 

15,000

To S’s Capital A/c

 

 

9,000

To T’s Capital A/c

 

 

6,000

(Workmen’s Compensation Reserve distributed among partners in their old ratio )

 

 

 

 

 

 

 

T’s Capital A/c

Dr.

 

1,21,000

 

To T’s Executors A/c

 

 

1,21,000

(Amount due to T after all adjustments transferred to his Executor’s Account)

 

 

 

 

 

 

 

T’s Executor’s A/c

Dr.

 

21,000

 

To Bank A/c

 

 

21,000

(Amount paid to T’s Executor)

 

 

 

 

 

 

 

 

T’s Executor’s Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2016

 

 

2016

 

 

Aug. 01

Cash A/c

21,000

Aug. 01

T’s Capital A/c

1,21,000

2017     2017    

Feb. 01

Cash A/c (25,000 + 5,000)

30,000

Feb. 01

Interest (1,00,000 ×10% for 6 months)

5,000

March 31

Balance c/d

76,250

March 31

Interest (75,000 ×10% for 2 months)

1,250

 

 

1,27,250

 

 

1,27,250

2017

 

 

2017

 

 

August 01

Cash A/c (25,000 + 1,250 + 2,500)

28,750

April 01

Balance b/d

76,250

2018

 

 

August 01

Interest (75,000 × 10% for 4 months)

2,500

Feb. 01 Cash A/c (25,000 + 2,500) 27,500 2018    

March 31

Balance c/d

25,417

Feb. 01

Interest (50,000 × 10% for 6 months)

2,500

 

 

 

March 31

Interest (25,000 × 10% for 2 months)

417

 

 

81,667

 

 

81,667

2018

 

 

2018

 

 

August 01

Cash A/c (25,000 + 417 + 833)

26,250

April 01

Balance b/d

25,417

 

 

 

August 01

Interest (25,000 × 10% for 4 months)

833

 

 

26,250

 

 

26,250

 

 

 

 

 

 


Working Notes:

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase



∴ Goodwill = Average Profit × Number of Years’ Purchase

= 70,000 × 2.5 = Rs 1,75,000

WN 2 Adjustment of Goodwill

Old Ratio (R, S and T) = 5 : 3 : 2

T died.

∴ New Ratio (R and S) = 5 : 3 and

Gaining Ratio = 5 : 3

T’s Share in Goodwill =

This share of goodwill is to be distributed between R and S in their gaining ratio (i.e. 5 : 3).



WN 3 Calculation of T’s Share of Profit

Profit for 2016-17 = Rs 75,000

T's Share in Profit = 75,000 × 210 × 412 = Rs 5,000

WN 4
 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Machinery

10,000

Patents

10,000

Profit transferred to:

 

Leasehold

25,000

R’s Capital A/c

12,500

 

 

 

S’s Capital A/c

7,500

 

 

 

T’s Capital A/c

5,000

25,000

 

 

 

35,000

 

35,000

 

 

 

 


WN 5

T’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Goodwill

5,000

Balance b/d

75,000

T’s Executor’s A/c

1,21,000

Workmen’s Compensation Reserve

6,000

 

 

Profit and Loss Suspense A/c

5,000

 

 

R’s Capital A/c

21,875

 

 

S’s Capital A/c

13,125

 

 

Revaluation A/c (Profit)

5,000

 

1,26,000

 

1,26,000

 

 

 

 

Page No 6.100:

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Workmen’s Compensation Reserve

Dr.

 

6,000

 

To X’s Capital A/c

 

 

3,000

To Y’s Capital A/c

 

 

2,000

To Z’s Capital A/c

 

 

1,000

(Workmen’s Compesation Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

General Reserve A/c

Dr.

 

6,000

 

To X’s Capital A/c

 

 

3,000

To Y’s Capital A/c

 

 

2,000

To Z’s Capital A/c

 

 

1,000

(General Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

3,000

 

Y’s Capital A/c

Dr.

 

2,000

 

Z’s Capital A/c

Dr.

 

1,000

 

To Advertisement Suspense A/c

 

 

6,000

(Advertisement suspense written off among partners in their old ratio)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

4,500

 

Y’s Capital A/c

Dr.

 

3,000

 

To Z’s Capital A/c

 

 

7,500

(Z’s share of goodwill adjusted )

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

3,600

 

  To Sundry debtors A/c

Dr.

 

 

1,000

To Furniture A/c

 

 

500

To Plant and Machinery A/c

 

 

1,500

To Bills Receivable A/c

 

 

600

(Decrease in value of Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Stock A/c

Dr.

 

1,000

 

Building A/c

Dr.

 

5,000

 

To Revaluation A/c

 

 

6,000

(Increase in value of Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

2,400

 

To X’ Capital A/c

 

 

1,200

To Y’s Capital A/c

 

 

800

To Z’s Capital A/c

 

 

400

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

1,333

 

To Z’s Capital A/c

 

 

1,333

(Z’s share of profit transferred his capital account)

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

22,233

 

  To Z’s Executor’s A/c

 

 

22,233

(Amount due to Z transferred to his Executor’s Account)

 

 

 

 

 

 

 

Z’s Executor’s A/c

Dr.

 

12,333

 

To Bank A/c

 

 

12,333

(Amount paid to Z’s Executor)

 

 

 

 

 

 

 

 

Z’s Executor’s Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2015

 

 

2015

 

 

April 30

Bank A/c

12,233

April 30

Z’s Capital A/c

22,233

Dec. 31

Balance c/d

10,667

Dec. 31

Interest (10,000 × 10% for 8 months)

667

 

 

22,900

 

 

22,900

2016

 

 

2016

 

 

April 30

Bank A/c (5,000 + 667 + 333)

6,000

Jan. 01

Balance b/d

10,667

 

 

 

April 30

Interest (10,000 × 10% for 4 months )

333

 

Balance c/d

5,333

Dec. 31

Interest (5,000 × 10% for 8 months)

333

 

 

11,333

 

 

11,333

2017

 

 

2017

 

 

April 30

Bank A/c (5,000 + 333 + 167)

5,500

April 01

Balance b/d

5,333

 

 

 

April 30

Interest (5,000 × 10% for 4months)

167

 

 

5,500

 

 

5,500

 

 

 

 

 

 


Working Notes:

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase



∴ Goodwill = Average Profit × Number of Years’ Purchase

= 15,000 × 3 = Rs 45,000

WN 2 Adjustment of Goodwill

Old Ratio = 3 : 2 : 1

Z died.

∴ New Ratio (X and Y) = 3 : 1 and

Gaining Ratio = 3 : 2

Z’s Share in Goodwill =

This share of goodwill is to be distributed between X and Y in their gaining ratio (i.e. 3 : 1).



WN 3 Calculation Z’s Share of Profit

Profit for Previous Year = Rs 24,000

∴ Z’s Profit Share

WN 4

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Sundry Debtors

1,000

Stock

1,000

Furniture

500

Building

5,000

Plant and Machinery

1,500

 

 

Bills Receivable

600

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

1,200

 

 

 

Y’s Capital A/c

800

 

 

 

Z’s Capital A/c

400

2,400

 

 

 

6,000

 

6,000

 

 

 

 



Page No 6.101:

Answer:

Black’s Executor’s Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Black’s Executor’s Loan A/c 1,28,000 Balance b/d 60,000
    Reserves A/c (WN1) 12,000
    Profit and Loss Suspense A/c (WN 2) 5,600
    Brown’s Capital A/c (WN 3) 50,400
       
  1,28,000   1,28,000
       

Working Notes:

Profit Sharing Ratio between  Brown and Black is 3 : 2

WN 1: Calculation of Share of Reserve

30,000 × 25 = Rs 12,000

WN 2: Calculation of Share of Profits

Total Profit = 42,000 + 39,000 + 45,000 = Rs 1,26,000

Average Profit = Total Profit3Average Profit = 1,26,0003=Rs 42,000

Black’s Share = 42,000 × 25 × 412 = Rs 5,600

WN 3: Calculation of Share of  Goodwill

Average Profit = Rs 42,000

Goodwill = 42,000 × 3 = Rs 1,26,000

Black’s Share = 1,26,000 × 25=Rs 50,400

Page No 6.101:

Answer:

Revaluation Account
Dr.   Cr.
Particulars Amount Rs Particulars Amount Rs
Stock A/c 1,500 Land and Building A/c 25,000
    Provision for Doubtful Debts A/c 2,000
Profit transferred to:      
X’s Capital A/c
8,500      
Y’s Capital A/c
8,500      
Z’s Capital A/c
8,500 25,500    
  27,000   27,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Z’s Capital A/c 4,375 4,375   Balance b/d 75,000 50,000 50,000
Goodwill A/c 15,750 15,750 15,750 Profit & Loss Suspense A/c     1,875
Z’s Executor A/c     56,925 Revaluation A/c 8,500 8,500 8,500
Balance c/d 66,925 41,925   X’s Capital A/c     4,375
        Y’s Capital A/c     4,375
        Investment Fluctuation Reserve 550 550 550
        Contingency Reserve 3,000 3,000 3,000
               
  87,050 62,050 72,675   87,050 62,050 72,675
               
 
Balance Sheet
as on April 01, 2010 after Z’s death
Liabilities Amount Rs Assets Amount Rs
Z’s Executor 56,925 Cash 2,500
Capital A/cs:   Bank 10,000
X
66,925   Debtors 25,000
Y
41,925 1,08,850 Stock 23,500
Creditors 33,250 Land and Building 1,25,000
Investment Fluctuation Reserve 1,350 Investments (at Cost) 12,500
    Profit and Loss Suspense A/c 1,875
  2,00,375   2,00,375
       

Working Notes:

1. Investment Fluctuation Reserve is required only upto Rs 1,350, the balance of Rs 1,650 is credited to Partner’s Capital A/c in their old profit sharing ratio.

2. Goodwill already appearing in the books of accounts is to be written off in old ratio

3. Calculation of Goodwill:
 
Average Profit = Total Profit5

Total Profit = 28,750 + 35,000 + 22,500 + 20,000 + 25,000 = Rs 1,31,250

Average Profit = 1,31,2505=Rs 26,250

Goodwill = 26,250 × 1 = Rs 26,250

Z’s share = 26,250 × 13 = Rs 8,750

Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio which is 1 : 1.

4. Profit share of Z
Average Profit for 3 years = Total Profit3

Total Profit = 22,500 + 20,000 + 25,000 = Rs 67,500

Average Profit = 67,5003=Rs 22,500

Z’s Share = 22,500 × 13 × 312 = Rs 1,875



Page No 6.102:

Answer:

Bharati’s Capital Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Bharati’s Executor’s A/c 26,300 Balance b/d 12,000
    Interest on Capital A/c 300
    General Reserve A/c 4,000
    Profit and Loss Suspense A/c 4,000
    Arti’s Capital A/c 4,500
    Seema’s Capital A/c 1,500
  26,300   26,300
       

Working Notes:

WN 1: Calculation of  Interest on Capital

12,000 × 10100 × 312 = Rs 300

WN 2: Calculation of  Profit share

10% of Sales = 1,20,000 × 10100=12,000

Bharati’s Share = 12,000 × 26=Rs 4,000

WN 3: Calculation of  Goodwill

Average profit of 3 years × 2 years of purchase

Average Profit = Total Profit3

Total Profit = 8,200 + 9,000 + 9,800 = Rs 27,000

Average Profit = 27,0003=Rs 9,000

Goodwill = 9,000 × 2 = Rs 18,000

Bharti’s Share = 18,000 × 26=Rs 6,000

Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio which is 3 : 1.

Note: The answer given in the book is Rs 26,000. However, as per the solution provided, the actual amount payable to Bharati's Executor is Rs 26,300.

Page No 6.102:

Answer:

  Books of 
  Journal
Date Particulars L.F. Debit
Amount

Rs
Credit
Amount

Rs
  Building A/c Dr.   5,000  
  Stock A/c Dr.   1,000  
 
To Revaluation A/c
      6,000
  (Value of assets has increased)      
           
  Revaluation A/c Dr.   3,600  
 
To Debtors A/c
      1,000
 
To Furniture A/c
      500
 
To Plant and Machinery A/c
      1,500
 
To Bills Receivable
      600
  (Value of assets has decreased)      
           
  Revaluation A/c Dr.   2,400  
 
To P’s Capital A/c
      1,200
 
To Q’s Capital A/c
      800
 
To R’s Capital A/c
      400
  (Profit on Revaluation credited to Partner’s Capital A/c)      
           
  Profit and Loss Suspense A/c Dr.   1,333  
 
To R’s Executor A/c
      1,333
  (R’s share of Profit credited to his account)      
           
  P’s Capital A/c Dr.   4,500  
  Q’s Capital A/c Dr.   3,000  
 
To R’s Capital A/c
      7,500
  (R’s share of goodwill credited to his account and debited to P and Q in their gaining ratio.)      
           
  Reserve Dr.   6,000  
 
To P’s Capital A/c
      3,000
 
To Q’s Capital A/c
      2,000
 
To R’s Capital A/c
      1,000
  (Reserve credited to Partner’s Capital Account in their old ratio.)      

 

Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
R’s Capital A/c 4,500 3,000   Balance b/d 22,750 15,250 12,000
R’s Executor A/c     22,233 Reserve A/c 3,000 2,000 1,000
Balance c/d 22,450 15,050   Profit & Loss Suspense A/c     1,333
        Revaluation A/c 1,200 800 400
        P’s Capital A/c     4,500
        Q’s Capital A/c     3,000
  26,950 18,050 22,233   26,950 18,050 22,233
               
 
R’s Executor’s Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Bank A/c 12,900 Balance b/d 22,233
R’s Executor’s Loan A/c 9,333    
  22,233   22,233
       
 
Balance Sheet
as on July 31, 2015 after R’s death
Liabilities Amount
Rs
Assets Amount
Rs
       
    Cash at Bank 5,800
Capital A/cs:   Bills Receivable (800 – 600) 200
P
22,450   Debtors 15,000
Q
15,050 37,500 Stock 10,000
Creditors 5,000 Building 35,000
Bills Payable 2,000 Furniture 1,500
Loans (7,100 + 12,900) 20,000 Plant and Machinery 5,000
R’s Executor’s A/c 9,333 Profit and Loss Suspense A/c 1,333
  73,833   73,833
       

Working Notes:

1. Profit = 24,000 × 16 × 412 = Rs 1,333

2. Total Profit = 24,000 + 16,000 + 20,000 + 10,000 + 5,000 = Rs 75,000

Average Profit =Total Profit5Average Profit =75,0005=Rs 15,000

Goodwill = Average Profit of 5 Years’ × 3 Years’ of Purchase

Goodwill = 15,000 × 3 = Rs 45,000

R’s share = 45,000×16= Rs 7,500



Page No 6.103:

Answer:

Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
R’s Capital A/c 7,900 3,950   Balance b/d 15,000 10,000 10,000
Drawings A/c     5,000 Reserve Fund A/c 10,000 5,000 5,000
R’s Executor A/c     22,936 Profit & Loss Suspense A/c     1,086
Balance c/d 17,100 11,050   P’s Capital A/c     7,900
        Q’s Capital A/c     3,950
  25,000 15,000 27,936   25,000 15,000 27,936
               
 
R’s Executor’s Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Bank A/c    22,936 Balance b/d 22,936
       
  22,936   22,936
       

 

Balance Sheet
as on July 01, 2016 after R’s death
Liabilities Amount Rs Assets Amount Rs
Creditors 25,000 Building 26,000
Capital A/cs:   Debtors 15,000
P
17,100   Bills Receivable 6,000
Q
11,050 28,150 Stock 12,000
Bank Overdraft 6,936 Profit and Loss Suspense A/c 1,086
  60,086   60,086
       

Working Notes:

WN 1: Calculation of Share of Profit

Average Profit = Total Profit3

Total Profit = 16,000 + 16,000 + 15,400 = Rs 47,400

Average Profit = 47,4003=Rs 15,800

Total Profits = 15,800 + 1,580 (10% of 15,800) = Rs 17,380

R’s Share = 17,380×14×312=Rs 1,086

WN 2: Calculation of Goodwill

Goodwill = Total Profits = Rs 47,400

R’s Share = 47,400×14=Rs 11,850

Bank A/c
Dr.   Cr.
Particulars Amount Rs Particulars Amount Rs
Balance b/d 6,000 R’s Executors’ A/c    22,936
Investments 15,000 R’s Capital A/c 5,000
Balance c/d 6,936    
  27,936   27,936
       

Page No 6.103:

Answer:

Revaluation Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Provision for Doubtful Debts A/c 1,800 Furniture A/c 3,750
Machinery A/c 12,000 Stock A/c 3,200
    Advertisement Expenses A/c 2,100
    Loss transferred to:  
   
X’s Capital A/c
2,375  
   
Y’s Capital A/c
1,583  
   
Z’s Capital A/c
792 4,750
  13,800   13,800
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Balance b/d (Current A/c)     5,000 Balance b/d (Capital A/c) 1,50,000 1,00,000 50,000
Revaluation A/c 2,375 1,583 792 Balance b/d (Current A/c) 8,000 2,500  
Z’s Capital A/c 3,000 2,000   Workmen Compensation Reserve A/c 3,000 2,000 1,000
Z’s Executor A/c     54,208 X’s Capital A/c     3,000
Balance c/d 1,67,625 1,08,917   Y’s Capital A/c     2,000
        General Reserve A/c 12,000 8,000 4,000
  1,73,000 1,12,500 60,000   1,73,000 1,12,500 60,000
               
 
Z’s Executor’s Account
Dr.   Cr.
Date Particulars Amount
Rs
Date Particulars Amount
Rs
2013     2013    
Sep. 30 Bank A/c 29,272 April 01 Balance b/d 54,208
2014     Sep. 30 Interest A/c (WN 2) 2,168
March 31 Bank A/c 28,188 2014    
      March 31 Interest A/c (WN 2) 1,084
           
    57,460     57,460
           

Working Notes:

WN 1: Calculation of Share of Goodwill

Zs Share of Goodwill = 30,000×16=Rs 5,000 (To be compensated by X and Y in 3:2)

WN 2: Calculation of Share of Interest

54,208×8100×612=Rs 2,16827,104×8100×612=Rs 1,084



Page No 6.104:

Answer:

Calculation of Amount Payable to Legal Representative of B
Particulars Amount
Rs
Capital Balance 37,500
  Add:  
  Interest on Capital 1,125
  Profit and Loss Suspense 27,500
  Drawings 40,000
  General Reserve 8,333
  1,14,458
 Less:  
  Drawings 25,000
  Interest on Drawings A/c 625
Total 88,833
   

Working Notes:

WN 1: Calculation of Interest on Capital

Interest on Capital = 37,500×6100×612=Rs 1,125


WN 2: Calculation of Profit

Total Profit = 1,62,500 + 1,60,000 + 1,72,500 = Rs 4,95,000

Average Profit = Total Profit3Average Profit = 4,95,0003=Rs 1,65,000

B’s Share = 1,65,000×13×612=Rs 27,500

WN
3:
Calculation of Interest on Drawings

Interest on drawings = 25,000×10100×312=Rs 625

Since, date of drawings has not been specified, thus, interest has been calculated for a average period of 3 months as drawings were given for the period of 6 months.

Page No 6.104:

Answer:

Revaluation Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Stock A/c 24,000 Land and Building A/c 75,000
       
Provision for Doubtful Debts A/c 15,000    
Profit transferred to:      
P’s Capital A/c
12,000        
Q’s Capital A/c
18,000        
R’s Capital A/c
6,000 36,000    
  75,000   75,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
Q’s Capital A/c 54,000     Balance b/d 3,00,000 6,00,000 9,00,000
R’s Capital A/c 90,000     Policy A/c 60,000 90,000 30,000
Advertisement Suspense A/c 12,000 18,000 6,000 P’s Capital A/c   54,000 90,000
Goodwill A/c 12,000 18,000 6,000 Workmen Compensation Reserve A/c 12,000 18,000 6,000
Bank A/c     5,11,500 Investments Fluctuation Reserve A/c 6,000 9,000 3,000
R’s Executor A/c     5,11,500 Revaluation A/c 12,000 18,000 6,000
Balance c/d 2,22,000 7,53,000          
  3,90,000 7,89,000 10,35,000   3,90,000 7,89,000 10,35,000
               
 
Balance Sheet
as on April 01, 2016 after R’s death
Liabilities Amount
Rs
Assets Amount
Rs
Creditors 7,20,000 Land and Building 8,25,000
Capital A/cs:   Investments 1,38,000
P
2,22,000   Stock 2,16,000
Q
7,53,000 9,75,000 Debtors 9,00,000  
Employees Provident Fund 3,60,000
Less: Provision for Doubtful Debts
45,000 8,55,000
Workmen Compensation Reserve 24,000 Bank (8,88,000 – 5,11,500 + 1,80,000) 5,56,500
R’s Executor A/c 5,11,500    
       
       
       
  25,90,500   25,90,500
       

Working Notes:

WN 1: Calculation of Gaining Ratio

Gaining Ratio = New Ratio – Old Ratio

Old Ratio = 2 : 3 : 1

New Ratio = 3 : 2

P's share of Gain = 35 - 26 = 830Q's share of Gain = 25 - 36 = -330(Sacrifice)

WN 2: Calculation of Share of Goodwill

Total Profit = 1,35,000 + 2,70,000 + 4,05,000 = Rs 8,10,000

Average Profit =Total Profit5Average Profit =8,10,0003=Rs 2,70,000

Goodwill = Average Profit × 1 Year of Purchase

Goodwill = 2,70,000 × 2 = Rs 5,40,000

 P will give = 5,40,000 × 830=Rs 1,44,000Q will get = 5,40,000 × 330=Rs 54,000R will get =5,40,000 × 16=Rs 90,000 



Page No 6.105:

Answer:

Journal
Particulars
L.F.
Debit
Amount
Rs
Credit
Amount
Rs
General Reserve A/c
Dr.
 
10,000
 
To A’s Capital A/c
 
 
 
6,000
To B’s Capital
 
 
 
2,000
To C’s Capital A/c
 
 
 
2,000
(General reserve distributed among partners in their old ratio)
 
 
 
 
 
 
 
 
 
Land A/c
Dr.
 
1,00,000
 
To Revaluation A/c
 
 
 
1,00,000
(Increase in value of Land transferred to Revaluation Account)
 
 
 
 
 
 
 
 
 
Revaluation A/c
Dr.
 
68,000
 
To Plant and Machinery A/c
 
 
 
68,000
(Decrease in value of Plant and Machinery transferred to Revaluation Account)
 
 
 
 
 
 
 
 
 
Revaluation A/c
Dr.
 
32,000
 
To A’s Capital A/c
 
 
 
19,200
To B’s Capital A/c
 
 
 
6,400
To C’s Capital A/c
 
 
 
6,400
(Revaluation profit distributed among partners in their old ratio)
 
 
 
 
 
 
 
 
 
A’s Capital A/c
Dr.
 
36,000
 
C’s Capital A/c
Dr.
 
12,000
 
To B’s Capital A/c
 
 
 
48,000
(B’s share of goodwill adjusted)
 
 
 
 
 
 
 
 
 
B’s Capital A/c
Dr.
 
10,000
 
To B’s Drawings A/c
 
 
 
10,000
(B’s drawing charged from his capital account)
 
 
 
 
 
 
 
 
 
Profit and Loss Suspense A/c
Dr.
 
4,000
 
To B’s Capital A/c
 
 
 
4,000
(B’s share of profit transferred to his capital account)
 
 
 
 
 
 
 
 
 
B’s Capital A/c
Dr.
 
4,63,200
 
To B’s Executor’s A/c
 
 
 
4,63,200
(Amount due to B after all adjustments transferred to his Executor’s Account)
 
 
 
 
 
 
 
 
 

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

Average Profit = 80,000 + 1,30,000 + 150,0003=Rs 1,20,000   

∴ Goodwill = Average Profit × Number of Years’ Purchase

= 1,20,000 × 2 = Rs 2,40,000

WN 2 Adjustment of Goodwill

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

B died.

∴ New Ratio (A and C) = 3 : 1 and

Gaining Ratio = 3 : 1

B’s Share in Goodwill = 2,40,000×15=Rs 48,000

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 3 : 1).

A = 48,000×34=36,000B =48,000×14=12,000 

WN 3 Calculation of B’s Share of Profit

B's Share of Profit = 1,20,000×212×15=Rs 4,000


WN 4

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plan and Machinery

68,000

Land

1,00,000

Profit transferred to:

 

 

 

A’s Capital A/c

19,200

 

 

 

B’s Capital A/c

6,400

 

 

 

C’s Capital A/c

6,400

32,000

 

 

 

1,00,000

 

1,00,000

 

 

 

 


WN 5
B’s Capital Account
Dr.
 
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Drawings A/c
10,000
Balance b/d
4,12,800
B’s Executor’s A/c
4,63,200
General Reserve
2,000
 
 
Profit and Loss Suspense A/c
4,000
 
 
A’s Capital A/c
36,000
 
 
C’s Capital A/c
12,000
 
 
Revaluation A/c (Profit)
6,400
 
 
 
 
 
4,73,200
 
4,73,200
 
 
 
 



Page No 6.106:

Answer:

X’s Capital Account
Dr.   Cr.
Particulars Amount Rs Particulars Amount Rs
Goodwill A/c 18,900 Balance b/d 90,000
X’s Executor’s A/c 1,01,850 Y’s Capital A/c 5,250
    Z’s Capital A/c 5,250
    Profit and Loss Suspense A/c 2,250
    Revaluation A/c (Profit) 18,000
  1,20,750   1,20,750
       

Working Notes:

WN 1: Calculation of X’s Profit Share

Total Profit = 30,000 + 24,000 + 27,000 = Rs 81,000

Average Profit =Total Profits for Last 3 Years'3Average Profit =81,0003=Rs 27,000

X’s Share = 27,000×13×312=Rs 2,250

WN 2: Calculation of Share of Goodwill

Total Profit= 30,000 + 24,000 + 27,000 + 42,000 + 34,500 = Rs 1,57,500

Average Profit =Total Profit5Average Profit =1,57,5005=Rs 31,500

Goodwill = Average Profit × 1 Year of Purchase

Goodwill = 31,500 × 1 = Rs 31,500

X’s Share = 31,500×13=Rs 10,500(to be compensated equally by Y and​ Z)

WN 3: Calculation of Revaluation Profit

Increase in Value of Freehold Property = Rs 54,000

X’s Share = 54,000×13=Rs 18,000

Page No 6.106:

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Fixed Assets

2,500

Creditors

2,000

Provision for Doubtful Debts

5,000

Loss on Revaluation transferred to

 

 

 

X’s Capital A/c

2,750

 

 

 

Y’s Capital A/c

1,650

 

 

 

Z’s Capital A/c

1,100

5,500

 

7,500

 

7,500

 

 

 

 

             

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Revaluation A/c

2,750

1,650

1,100

Balance b/d

40,000

62,000

33,000

Goodwill A/c

2,500

1,500

1,000

Y’s Capital A/c

8,000

 

 

Advertisement Suspense A/c

2,500

1,500

1,000

Z’s Capital A/c

32,000

 

 

X’s Capital A/c

 

8,000

32,000

Profit and Loss A/c

42,500

25,500

17,000

Bank A/c

1,19,750

 

 

Workmen Compensation Reserve

5,000

3,000

2,000

Balance c/d (WN2)

 

79,000

1,18,500

Bank A/c (Bal. Fig.)

 

1,150

1,01,600

 

1,27,500

91,650

1,53,600

 

1,27,500

91,650

1,53,600

 

 

 

 

 

 

 

 

                 

Working Notes:

WN 1: Calculation of sacrificing/gaining ratio

 

WN 2: Calculation of New Capital of Y and Z



Page No 6.107:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2014

 

 

 

 

 

August 01

Patents A/c

Dr.

 

85,000

 

 

Investments A/c

Dr.

 

6,000

 

 

 To Revaluation A/c

 

 

 

91,000

 

(Patens recorded at a lesser value and investments sold at a profit of Rs 6,000)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

16,000

 

 

   To Machinery A/c

 

 

 

16,000

 

(Machinery is recorded with excess value of

Rs 16,000 in the books)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

75,000

 

 

  To X’s Capital A/c

 

 

37,500

 

  To Y’s Capital A/c

 

 

 

22,500

 

  To Z’s Capital A/c

 

 

 

15,000

 

(Profit on revaluation transferred to Partners’ Capital Account in old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

21,875

 

 

Y’s Capital A/c

 

 

13,125

 

 

 To Z’ s Capital A/c

 

 

 

35,000

 

(Z’s share of goodwill compensated by X and Y in gaining ratio)

 

 

 

 

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

5,000

 

 

  To Profit and Loss Suspense A/c

 

 

 

5,000

 

(Z’s share in loss till his death)

 

 

 

 

 

 

 

 

 

 

 

Workmen Compensation Reserve

Dr.

 

17,500

 

 

  To Workmen Compensation Claim

 

 

 

10,000

 

  To X’s Capital A/c

 

 

 

3,750

 

  To Y’s Capital A/c

 

 

 

2,250

 

  To Z’s Capital A/c

 

 

 

1,500

 

(Amount transferred for workmen compensation claim and excess amount is distributed among the partners in old ratio)

 

 

 

 

 

 

 

 

 

 

 

Investments Fluctuation Reserve

Dr.

 

17,500

 

 

  To X’s Capital A/c

 

 

 

8,750

 

  To Y’s Capital A/c

 

 

 

5,250

 

  To Z’s Capital A/c

 

 

 

3,500

 

(Entire balance of IFF is distributed among the partners in old ratio)

 

 

 

 

 

 

 

 

 

 

 

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 Advertisement Expenditure A/c

 

 

 

5,000

 

(Advertisement expenditure debited to partners’ capital accounts in old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

1,87,500

 

 

Y’s Capital A/c

Dr.

 

1,12,500

 

 

Z’s Capital A/c

Dr.

 

75,000

 

 

  To Profit and Loss A/c

 

 

 

3,75,000

 

(Loss during 2013-14 debited to partners’ capital accounts in old ratio)

 

 

 

 

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

1,24,000

 

 

  To Z’s Executor A/c

 

 

1,24,000

 

(Z’s capital balance is transferred to Z’s Executor Account)

 

 

 

 

 

 

 

 

 

 

Z’s Executor A/c

Dr.

 

24,000

 

 

   To Bank A/c

 

 

24,000

 

(Payment made to Z’s executor)

 

 

 

 

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Profit and Loss A/c

1,87,500

1,12,500

75,000

Balance b/d

3,37,500

2,37,500

1,85,000

Z’s Capital A/c

21,875

13,125

 

Revaluation A/c