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Page No 3.22:

Question 1:

Answer:

Old Ratio (A and B) = 1 : 1

New Ratio (A and B) = 4 : 3

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

 

A’s Gain = 1/14

B’s Sacrifice = 1/14

Page No 3.22:

Question 2:

Old Ratio (A and B) = 1 : 1

New Ratio (A and B) = 4 : 3

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

 

A’s Gain = 1/14

B’s Sacrifice = 1/14

Answer:

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

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

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

 

Z’s Gain = 1/10

Y’s Sacrifice = 1/10

Page No 3.22:

Question 3:

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

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

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

 

Z’s Gain = 1/10

Y’s Sacrifice = 1/10

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 3.22:

Question 4:

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

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 3.22:

Question 5:

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 =

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Y’s Capital A/c

Dr.

 

3,000

 

 

Z’s Capital A/c  

Dr.

 

12,000

 

 

To X’s Capital A/c

 

 

 

15,000

 

(Amount of goodwill adjusted on change in profit sharing ratio)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

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

WN 2 Calculation of Goodwill

WN 3 Adjustment of Goodwill

Page No 3.22:

Question 6:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Y’s Capital A/c

Dr.

 

3,000

 

 

Z’s Capital A/c  

Dr.

 

12,000

 

 

To X’s Capital A/c

 

 

 

15,000

 

(Amount of goodwill adjusted on change in profit sharing ratio)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

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

WN 2 Calculation of Goodwill

WN 3 Adjustment of Goodwill

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

X’s Capital A/c

Dr.

 

6,000

 

 

Y’s Capital A/c

Dr.

 

3,600

 

 

Z’s Capital A/c 

Dr.

 

2,400

 

 

To Goodwill A/c

 

 

 

12,000

 

(Goodwill written off)

 

 

 

 

 

 

 

 

 

Y’s Capital A/c

Dr.

 

1,000

 

 

Z’s Capital A/c

Dr.

 

4,000

 

 

To X’s Capital A/c

 

 

5,000

 

(Amount of goodwill adjusted on change in profit sharing ratio)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

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

WN 2 Writing off of Old Goodwill

WN 3 Adjustment of Goodwill

Page No 3.22:

Question 7:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

X’s Capital A/c

Dr.

 

6,000

 

 

Y’s Capital A/c

Dr.

 

3,600

 

 

Z’s Capital A/c 

Dr.

 

2,400

 

 

To Goodwill A/c

 

 

 

12,000

 

(Goodwill written off)

 

 

 

 

 

 

 

 

 

Y’s Capital A/c

Dr.

 

1,000

 

 

Z’s Capital A/c

Dr.

 

4,000

 

 

To X’s Capital A/c

 

 

5,000

 

(Amount of goodwill adjusted on change in profit sharing ratio)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

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

WN 2 Writing off of Old Goodwill

WN 3 Adjustment of Goodwill

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 2014 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 2014

WN 3 Calculation of New Goodwill

WN 4 Adjustment of Goodwill



Page No 3.23:

Question 8:

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 2014 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 2014

WN 3 Calculation of New Goodwill

WN 4 Adjustment of Goodwill

Answer:

(a) When Partners want to transfer the General Reserve in their Capital Accounts.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

General Reserve A/c

Dr.

 

54,000

 

 

To X’s Capital A/c

 

 

 

32,400

 

To Y’s Capital A/c

 

 

21,600

 

(General Reserve distributed)

 

 

 

 

 

 

 

 

Working Notes:

Distribution of General Reserve (in old ratio)

(b) When Partners do not want to transfer the General Reserve in their Capital Accounts.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Z’s Capital A/c

Dr.

 

12,000

 

 

To X’s Capital A/c

 

 

 

8,400

 

To Y’s Capital A/c

 

 

3,600

 

(General Reserve distributed)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X and Y) = 3 : 2

New Ratio (X, Y and Z) = 4 : 3 : 2

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

Sacrificing Ratio = 7 : 3

WN 2 Adjustment of General Reserve

Z’s Share in General Reserve =

This share is to be distributed between X and Y in their sacrificing ratio (i.e. 7 : 3).

Page No 3.23:

Question 9:

(a) When Partners want to transfer the General Reserve in their Capital Accounts.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

General Reserve A/c

Dr.

 

54,000

 

 

To X’s Capital A/c

 

 

 

32,400

 

To Y’s Capital A/c

 

 

21,600

 

(General Reserve distributed)

 

 

 

 

 

 

 

 

Working Notes:

Distribution of General Reserve (in old ratio)

(b) When Partners do not want to transfer the General Reserve in their Capital Accounts.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Z’s Capital A/c

Dr.

 

12,000

 

 

To X’s Capital A/c

 

 

 

8,400

 

To Y’s Capital A/c

 

 

3,600

 

(General Reserve distributed)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X and Y) = 3 : 2

New Ratio (X, Y and Z) = 4 : 3 : 2

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

Sacrificing Ratio = 7 : 3

WN 2 Adjustment of General Reserve

Z’s Share in General Reserve =

This share is to be distributed between X and Y in their sacrificing ratio (i.e. 7 : 3).

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Y’s Capital A/c

Dr.

 

30,000

 

 

To X’s Capital A/c

 

 

 

30,000

 

(Adjustment mode for goodwill and General Reserve)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Goodwill

WN 2 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X and Y) = 2 : 3

New Ratio (X and Y) = 1 : 2

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

WN 3 Adjustment of Goodwill

WN 4 Adjustment of General Reserve

WN 5 Net Adjustment of Goodwill and General Reserve

Particulars

X

Y

Adjustment of Goodwill

22,667 (Cr.)

22,667 (Dr.)

Adjustment of General Reserve

7,333 (Cr.)

7,333 (Dr.)

Net Amount

30,000 (Cr.)

30,000 (Dr.)

 

 

 

 

Page No 3.23:

Question 10:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Y’s Capital A/c

Dr.

 

30,000

 

 

To X’s Capital A/c

 

 

 

30,000

 

(Adjustment mode for goodwill and General Reserve)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Goodwill

WN 2 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X and Y) = 2 : 3

New Ratio (X and Y) = 1 : 2

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

WN 3 Adjustment of Goodwill

WN 4 Adjustment of General Reserve

WN 5 Net Adjustment of Goodwill and General Reserve

Particulars

X

Y

Adjustment of Goodwill

22,667 (Cr.)

22,667 (Dr.)

Adjustment of General Reserve

7,333 (Cr.)

7,333 (Dr.)

Net Amount

30,000 (Cr.)

30,000 (Dr.)

 

 

 

 

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Z’s Capital A/c

Dr.

 

5,400

 

 

To X’s Capital A/c

 

 

 

5,400

 

(Adjustment for General Reserve, Profit and Loss A/c and Advertisement Suspense account is made on change in profit sharing ratio)

 

 

 

 

 

 

 

 

Working Notes:

WN 1

WN 2 Calculation of Sacrificing (or Gaining) Ratio

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

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

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

Page No 3.23:

Question 11:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Z’s Capital A/c

Dr.

 

5,400

 

 

To X’s Capital A/c

 

 

 

5,400

 

(Adjustment for General Reserve, Profit and Loss A/c and Advertisement Suspense account is made on change in profit sharing ratio)

 

 

 

 

 

 

 

 

Working Notes:

WN 1

WN 2 Calculation of Sacrificing (or Gaining) Ratio

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

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

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

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Z’s Capital A/c

Dr.

 

760

 

 

To X’s Capital A/c

 

 

 

760

 

(Adjustment of revaluation profit made)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Net Profit or Loss on Revaluation

Particulars

Amount (Rs)

Increase in Investment

3,000 (Cr.)

Decrease in Plant and Machinery

(5,000) (Dr.)

Increase in Land and Building

10,000 (Cr.)

Increase in Outstanding Expenses

(400) (Dr.)

Decrease in Sunday Debtors

(10,000) (Dr.)

Decrease in Trade Creditors

10,000 (Cr.)

Profit on Revaluation

7,600 (Cr.)

 

 

WN 2 Calculation of Sacrificing (or Gaining) Ratio

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

New Ratio (X, Y and Z) = 4 : 3 : 3

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

 

WN 3 Adjustment of Revaluation Profit



Page No 3.24:

Question 12:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Z’s Capital A/c

Dr.

 

760

 

 

To X’s Capital A/c

 

 

 

760

 

(Adjustment of revaluation profit made)

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Net Profit or Loss on Revaluation

Particulars

Amount (Rs)

Increase in Investment

3,000 (Cr.)

Decrease in Plant and Machinery

(5,000) (Dr.)

Increase in Land and Building

10,000 (Cr.)

Increase in Outstanding Expenses

(400) (Dr.)

Decrease in Sunday Debtors

(10,000) (Dr.)

Decrease in Trade Creditors

10,000 (Cr.)

Profit on Revaluation

7,600 (Cr.)

 

 

WN 2 Calculation of Sacrificing (or Gaining) Ratio

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

New Ratio (X, Y and Z) = 4 : 3 : 3

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

 

WN 3 Adjustment of Revaluation Profit

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

X’s Capital A/c  

Dr.

 

15,000

 

 

Y’s Capital A/c

Dr.

 

5,000

 

 

To Z’s Capital A/c

 

 

20,000

 

(Adjustment made for Goodwill, General Reserve and Profit and Loss Account on change in profit sharing ratio)

 

 

 

 

 

 

 

 

 

Balance Sheet (after change in Profit Sharing Ratio)

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/c s:

 

Sunday Assets

7,00,000

X

1,95,000

 

 

 

Y

1,45,000

 

 

 

Z

1,40,000

4,80,000

 

 

General Reserve

65,000

 

 

Profit and Loss A/c

25,000

 

 

Creditors

1,30,000

 

 

 

7,00,000

 

7,00,000

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X, Y and Z) = 7 : 5 : 4

New Ratio (X, Y and Z) = 3 : 2 : 1

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

WN 2 Adjustment of General Reserve, Profit and Loss Account and Goodwill

Total Amount for Adjustment = General Reserve + Profit and Loss Account + Goodwill

= 65,000 + 25,000 + 1,50,000 = Rs 2,40,000

WN 3

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Z's Capital A/c

15,000

5,000

Balance b/d

2,10,000

1,50,000

1,20,000

 

 

 

 

X's Capital A/c

15,000

 

 

 

 

Y's Capital A/c

5,000

Balance c/d

1,95,000

1,45,000

1,40,000

 

 

 

 

 

2,10,000

1,50,000

1,40,000

 

2,10,000

1,50,000

1,40,000

 

 

 

 

 

 

 

 

Page No 3.24:

Question 13:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

X’s Capital A/c  

Dr.

 

15,000

 

 

Y’s Capital A/c

Dr.

 

5,000

 

 

To Z’s Capital A/c

 

 

20,000

 

(Adjustment made for Goodwill, General Reserve and Profit and Loss Account on change in profit sharing ratio)

 

 

 

 

 

 

 

 

 

Balance Sheet (after change in Profit Sharing Ratio)

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/c s:

 

Sunday Assets

7,00,000

X

1,95,000

 

 

 

Y

1,45,000

 

 

 

Z

1,40,000

4,80,000

 

 

General Reserve

65,000

 

 

Profit and Loss A/c

25,000

 

 

Creditors

1,30,000

 

 

 

7,00,000

 

7,00,000

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X, Y and Z) = 7 : 5 : 4

New Ratio (X, Y and Z) = 3 : 2 : 1

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

WN 2 Adjustment of General Reserve, Profit and Loss Account and Goodwill

Total Amount for Adjustment = General Reserve + Profit and Loss Account + Goodwill

= 65,000 + 25,000 + 1,50,000 = Rs 2,40,000

WN 3

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Z's Capital A/c

15,000

5,000

Balance b/d

2,10,000

1,50,000

1,20,000

 

 

 

 

X's Capital A/c

15,000

 

 

 

 

Y's Capital A/c

5,000

Balance c/d

1,95,000

1,45,000

1,40,000

 

 

 

 

 

2,10,000

1,50,000

1,40,000

 

2,10,000

1,50,000

1,40,000

 

 

 

 

 

 

 

 

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 3.24:

Question 14:

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

 

 

 

 

 

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

X's Capital A/c

Dr.

 

2,500

 

 

To Z'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

X

3,97,500

 

Plant and Machinery

4,20,000

Y

3,00,000

 

 

 

Z

2,02,500

9,00,000

 

 

 

10,30,000

 

10,30,000

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X, Y and Z) = 5 : 4 : 3

New Ratio (X, Y and Z) = 4 : 3 : 2

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

WN 2 Calculation of Profit or Loss on Revaluation

Particulars

Amount (Rs)

Increase in Stock

  60,000

(Cr.)

Decrease Furniture

(12,000)

(Dr.)

Decrease in Plant and Machinery

(20,000)

(Dr.)

Increase in Outstanding Expenses

(13,000)

(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

 

WN 4

Partners’ Capital Accounts

Dr.

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Z's Capital A/c

     2,500

Balance c/d

4,00,000

3,00,000

2,00,000

 

 

 

 

X'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 3.25:

Question 15:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

X's Capital A/c

Dr.

 

2,500

 

 

To Z'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

X

3,97,500

 

Plant and Machinery

4,20,000

Y

3,00,000

 

 

 

Z

2,02,500

9,00,000

 

 

 

10,30,000

 

10,30,000

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X, Y and Z) = 5 : 4 : 3

New Ratio (X, Y and Z) = 4 : 3 : 2

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

WN 2 Calculation of Profit or Loss on Revaluation

Particulars

Amount (Rs)

Increase in Stock

  60,000

(Cr.)

Decrease Furniture

(12,000)

(Dr.)

Decrease in Plant and Machinery

(20,000)

(Dr.)

Increase in Outstanding Expenses

(13,000)

(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

 

WN 4

Partners’ Capital Accounts

Dr.

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Z's Capital A/c

     2,500

Balance c/d

4,00,000

3,00,000

2,00,000

 

 

 

 

X'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

 

 

 

 

 

 

 

 

 

Answer:

Revaluation Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Machinery

7,000

X’s Capital A/c

5,000

 

Stock

1,000

Y’s Capital A/c

3,000

8,000

 

 

 

8,000

 

8,000

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

X

Y

Particulars

X

Y

Advertisement Suspense A/c

500

300

Balance b/d

52,000

54,000

Goodwill A/c

5,000

3,000

General Reserve A/c

3,000

1,800

X’s Capital

-

3,000

WCF

2,500

1,500

(Adjustment of Goodwill)

 

 

Revaluation A/c (Profit)

5,000

3,000

 

 

 

Y’s Capital A/c

3,000

-

Balance c/d

60,000

54,000

(Adjustment of Goodwill)

 

 

 

 

 

 

 

 

 

65,500

60,300

 

65,500

60,300

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2012 (after change in Profit Sharing Ratio)

Liabilities

Amount

Rs

Assets

Amount

Rs

X’s Capital

58,500

Machinery (38,000 + 7,000)

45,000

Z’s Capital

55,500

Furniture

15,000

Sundry Creditors

5,000

Sundry Debtors

33,000

Employees’ Provident Fund

1,000

Stock (7,000 + 1,000)

8,000

Workmen’s Compensation Reserve

6,000

Bank

25,000

 

1,26,000

 

1,26,000

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X and Y) = 5 : 3

New Ratio (X and Y) = 3 : 5

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

WN 2 Calculation of New Goodwill

Goodwill = Average Profit × Number of Years Purchase = 6,000 × 2 = Rs 12,000

Goodwill = 6,000 × 2 = Rs 12,000

WN 3 Adjustment of Goodwill

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Workmen’s Compensation Reserve A/c

Dr.

 

10,000

 

 

To Workmen’s Compensation Claim A/c

 

 

6,000

 

To X’s Capital A/c

 

 

2,500

 

To Y’s Capital A/c

 

 

1,500

 

(Workmen’s compensation claim distributed among partners in their old ratio i.e. 5 : 3)

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

5,000

 

 

Y’s Capital A/c

Dr.

 

3,000

 

 

To Goodwill A/c

 

 

8,000

 

(Goodwill written off among partners in their old ratio)

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

500

 

 

Y’s Capital A/c

Dr.

 

300

 

 

To Advertisement Suspense A/c

 

 

800

 

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

 

 

 

 

 

 

 

 

 

General Reserve A/c

Dr.

 

4,800

 

 

To X’s Capital A/c

 

 

3,000

 

To Y’s Capital A/c

 

 

1,800

 

(General Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

8,000

 

 

To X’s Capital A/c

 

 

5,000

 

To Y’s Capital A/c

 

 

3,000

 

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

 

 

Y’s Capital A/c

Dr.

 

3,000

 

 

To X’s Capital A/c

 

 

3,000

 

(Adjustment of goodwill made)

 

 

 

 

 

 

 

 



Page No 3.26:

Question 16:

Revaluation Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to:

 

Machinery

7,000

X’s Capital A/c

5,000

 

Stock

1,000

Y’s Capital A/c

3,000

8,000

 

 

 

8,000

 

8,000

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

X

Y

Particulars

X

Y

Advertisement Suspense A/c

500

300

Balance b/d

52,000

54,000

Goodwill A/c

5,000

3,000

General Reserve A/c

3,000

1,800

X’s Capital

-

3,000

WCF

2,500

1,500

(Adjustment of Goodwill)

 

 

Revaluation A/c (Profit)

5,000

3,000

 

 

 

Y’s Capital A/c

3,000

-

Balance c/d

60,000

54,000

(Adjustment of Goodwill)

 

 

 

 

 

 

 

 

 

65,500

60,300

 

65,500

60,300

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2012 (after change in Profit Sharing Ratio)

Liabilities

Amount

Rs

Assets

Amount

Rs

X’s Capital

58,500

Machinery (38,000 + 7,000)

45,000

Z’s Capital

55,500

Furniture

15,000

Sundry Creditors

5,000

Sundry Debtors

33,000

Employees’ Provident Fund

1,000

Stock (7,000 + 1,000)

8,000

Workmen’s Compensation Reserve

6,000

Bank

25,000

 

1,26,000

 

1,26,000

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X and Y) = 5 : 3

New Ratio (X and Y) = 3 : 5

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

WN 2 Calculation of New Goodwill

Goodwill = Average Profit × Number of Years Purchase = 6,000 × 2 = Rs 12,000

Goodwill = 6,000 × 2 = Rs 12,000

WN 3 Adjustment of Goodwill

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Workmen’s Compensation Reserve A/c

Dr.

 

10,000

 

 

To Workmen’s Compensation Claim A/c

 

 

6,000

 

To X’s Capital A/c

 

 

2,500

 

To Y’s Capital A/c

 

 

1,500

 

(Workmen’s compensation claim distributed among partners in their old ratio i.e. 5 : 3)

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

5,000

 

 

Y’s Capital A/c

Dr.

 

3,000

 

 

To Goodwill A/c

 

 

8,000

 

(Goodwill written off among partners in their old ratio)

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

500

 

 

Y’s Capital A/c

Dr.

 

300

 

 

To Advertisement Suspense A/c

 

 

800

 

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

 

 

 

 

 

 

 

 

 

General Reserve A/c

Dr.

 

4,800

 

 

To X’s Capital A/c

 

 

3,000

 

To Y’s Capital A/c

 

 

1,800

 

(General Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

8,000

 

 

To X’s Capital A/c

 

 

5,000

 

To Y’s Capital A/c

 

 

3,000

 

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

 

 

Y’s Capital A/c

Dr.

 

3,000

 

 

To X’s Capital A/c

 

 

3,000

 

(Adjustment of goodwill made)

 

 

 

 

 

 

 

 

Answer:

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

R’s Capital A/c

Dr.

 

8,000

 

 

To P’s Capital A/c

 

 

4,000

 

To Q’s Capital A/c

 

 

4,000

 

(Adjustment of goodwill made)

 

 

 

 

 

 

 

 

 

R’s Capital A/c

Dr.

 

14,000

 

 

To P’s Capital A/c

 

 

7,000

 

To Q’s Capital A/c

 

 

7,000

 

(Profit on revaluation adjusted)

 

 

 

 

 

 

 

 

 

General Reserve A/c

Dr.

 

48,000

 

 

To P’s Capital A/c

 

 

19,200

 

To Q’s Capital A/c

 

 

19,200

 

To R’s Capital A/c

 

 

9,600

 

(General Reserve distributed among partners in old ratio)

 

 

 

 

 

 

 

 

 

Partner’s Capital Accounts

Dr.

Cr.

Particulars

P

Q

R

Particulars

P

Q

R

P’s Capital A/c (Goodwill)

 

 

4,000

Balance b/d

2,40,000

2,00,000

1,60,000

Q’s Capital A/c (Goodwill)

 

 

4,000

R’s Capital A/c (Goodwill)

4,000

4,000

P’s Capital A/c (Revaluation)

 

 

7,000

R’s Capital A/c (Revaluation)

7,000

7,000

Q’s Capital A/c (Revaluation)

 

 

7,000

General Reserve

19,200

19,200

9,600

Balance c/d

2,70,200

2,30,200

1,47,600

 

 

 

 

 

 

 

 

 

 

 

 

 

2,70,200

2,30,200

1,69,600

 

2,70,200

2,30,200

1,69,600

 

 

 

 

 

 

 

 

 

Balance Sheet

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

55,000

Land

2,00,000

Bills Payable

17,000

Building

80,000

Capital A/cs:

 

Plant

1,60,000

P

2,70,200

 

Stock

2,10,000

Q

2,30,200

 

Debtors

60,000

R

1,47,600

6,48,000

Cash

10,000

 

7,20,000

 

7,20,000

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X, Y and Z) = 2 : 2 : 1

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

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

WN 2 Adjustment of Goodwill

WN 3 Calculation of Profit or Loss on Revaluation

Particulars

Amount (Rs)

Increase in Land

1,00,000

(Cr.)

Decrease in Building

 (4,000)

(Dr.)

Decrease in Plant

(8,000)

(Dr.)

Increase in Stock

15,000

(Cr.)

Decrease in Creditors

2,000

(Cr.)

Profit on Revaluation

1,05,000

(Cr.)

 

 

 

WN 4 Adjustment of Profit on Revaluation



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