Page No 6.70:
Question 51:
Following is the Balance Sheet of Kusum, Sneh and Usha as on 31st
March, 2021, who have agreed to share profits and losses in proportion of their
capitals:
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Liabilities |
` |
Assets |
` |
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Capital A/cs: |
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Land and Building |
4,00,000 |
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Kusum |
4,00,000 |
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Machinery |
6,00,000 |
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Sneh |
6,00,000 |
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Closing Stock |
2,00,000 |
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Usha |
4,00,000 |
14,00,000 |
Sundry Debtors |
2,20,000 |
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Employees' Provident Fund |
70,000 |
Less: Provision for Doubtful Debts |
20,000 |
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Workmen Compensation Reserve |
30,000 |
Cash at Bank |
|
2,00,000 |
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Sundry Creditors |
1,00,000 |
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|
2,00,000 |
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16,00,000 |
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16,00,000 |
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On 1st April, 2021, Kusum retired from the firm and the remaining
partners decided to carry on the business. It was agreed to revalue the assets
and reassess the liabilities on that date, on the following basis:
(a) Land and Building be appreciated by 30%.
(b) Machinery be depreciated by 30%.
(c) There were Bad Debts of `
35,000.
(d) The claim against Workmen Compensation Reserve was estimated at ` 15,000.
(e) Goodwill of the firm was valued at ` 2,80,000 and Kusum's share of goodwill was
adjusted against the Capital Accounts of the continuing partners Sneh and Usha
who have decided to share future profits in the ratio of 3 : 4
respectively.
(f) Capital of the new firm in total will be the same as before the retirement
of Kusum and will be in the new profit-sharing ratio of the continuing
partners.
(g) Amount due to Kusum be settled by paying ` 1,00,000 in cash and balance by transferring to her
Loan Account which will be paid later on.
Prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet of
the new firm after Kusum's retirement.
Answer:
Revaluation
Account |
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Dr. |
Cr. |
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Particulars |
Amount ( `) |
Particulars |
Amount ( `) |
|
Machinery A/c |
1,80,000 |
Land and Building A/c |
1,20,000 |
|
Bad Debts A/c (35,000 – 20,000) |
15,000 |
Loss on Revaluation transferred to: |
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Kusum |
21,429 |
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Sneh |
32,142 |
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Usha |
21,429 |
75,000 |
|
1,95,000 |
|
1,95,000 |
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Dr. |
Cr. |
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Particulars |
Kusum |
Sneh |
Usha |
Particulars |
Kusum |
Sneh |
Usha |
Revaluation A/c (Loss) |
21,429 |
32,142 |
21,429 |
Balance b/d |
4,00,000 |
6,00,000 |
4,00,000 |
Usha’s Capital A/c |
– |
– |
80,000 |
Workmen Compensation Fund |
4,286 |
6,428 |
4,286 |
Bank A/c |
1,00,000 |
– |
– |
Usha’s Capital A/c |
80,000 |
– |
– |
Kusum’s Loan A/c |
3,62,857 |
– |
– |
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|
Balance c/d |
– |
5,74,286 |
3,02,857 |
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|
4,84,286 |
6,06,428 |
4,04,286 |
|
4,84,286 |
6,06,428 |
4,04,286 |
Balance c/d |
– |
6,00,000 |
8,00,000 |
Balance b/d |
– |
5,74,286 |
3,02,857 |
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Bank A/c (WN3) |
– |
25,714 |
4,97,143 |
|
– |
6,00,000 |
8,00,000 |
|
– |
6,00,000 |
8,00,000 |
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Balance Sheet as at March 31, 2021 |
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Liabilities |
Amount ( `) |
Assets |
Amount ( `) |
|
Creditors |
1,00,000 |
Land & Building |
5,20,000 |
|
Employee’s Provident Fund |
70,000 |
Machinery (6,00,000 – 1,80,000) |
4,20,000 |
|
Workmen’s Compensation Claim |
15,000 |
Stock |
2,00,000 |
|
Kusum’s Loan |
3,62,857 |
Sundry Debtors (2,20,000 – 35,000) |
1,85,000 |
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Capital A/c : |
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Bank |
6,22,857 |
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Sneh |
6,00,000 |
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Usha |
8,00,000 |
14,00,000 |
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|
19,47,857 |
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19,47,857 |
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Working Notes
WN 1 Calculation of Gaining
Ratio
Old
Ratio (Kusum, Sneh and Usha) = 2:3:2
New Ratio (Sneh and Usha) = 3:4
Gaining Ratio = New Ratio – Old Ratio
Sneh‘s share= 3/7-3/7=nil
Usha‘s share= 4/7-2/7=2/7
WN2 Adjustment of Goodwill
Total
Goodwill of the Firm = 2,80,000
Kusum’s Share of
Goodwill = 2,80,000×2/7=80,000
It is to be adjusted by the Gaining partners i.e. only
by Usha
WN3 Adjustment
of Capital
Tatal capital of the firm before
kusum’s retirement =14,00,000
New Ratio (Sneh and Usha) = 3:4
Sneha‘s
new captial= 14,00,000×3/7=6,00,000
Usha‘s
new capital= 14,00,000×4/7=8,00,000
Particulars |
Sneh |
Usha |
New Capital Balance |
6,00,000 |
8,00,000 |
Adjusted Old Capital Balance |
5,74,286 |
3,02,857 |
Cash brought in by the Partner |
25,714 |
4,97,143 |
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WN4
Cash at Bank A/c |
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Dr. |
Cr. |
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Particulars |
Amount ( `) |
Particulars |
Amount ( `) |
Balance b/d |
2,00,000 |
Kusum’s Capital A/c |
1,00,000 |
Sneh’s Capital A/c |
25,714 |
Balance c/d |
6,22,857 |
Usha’s Capital A/c |
4,97,143 |
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|
7,22,857 |
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7,22,857 |
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Page No 6.71:
Question 52:
Lal, Bal and Pal are
partners sharing profits in the ratio of 5 : 3 : 7. Lal retired from
the firm. Bal and Pal decided to share future profits in the
ratio of 2 : 3. The adjusted Capital Accounts of Bal and Pal showed
balance of `
49,500 and `
1,05,750 respectively. The total amount to be paid to X is ` 1,35,750. This amount is to be paid
by Bal and Pal in a manner that their capitals become proportionate to
their new profit-sharing ratio. Calculate the amount to be brought in or to be
paid to partners.
Answer:
New Capital = 49,500 + 1,05,750 + 1,35,750 = ` 2,91,000
Bal's New Capital=2,91,000×2/5=1,16,400
Pal's New Capital=2,91,000×3/5=1,74,600
Bal brings in ` 66,900 (1,16,400 – 49,500)
Pal brings in ` 68,850 (1,74,600 – 1,05,750)
Page No 6.71:
Question 53:
Balance Sheet of X, Y and Z who shared
profits in the ratio of 5 : 3 : 2, as on 31st March, 2021 was as follows:
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Liabilities |
` |
Assets |
` |
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Sundry Creditors |
39,750 |
Bank (Minimum Balance) |
15,000 |
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Employees' Provident Fund |
5,250 |
Debtors |
97,500 |
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Workmen Compensation Reserve |
22,500 |
Stock |
82,500 |
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Capital A/cs: |
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Fixed Assets |
1,87,500 |
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X |
1,65,000 |
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Y |
84,000 |
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Z |
66,000 |
3,15,000 |
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3,82,500 |
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3,82,500 |
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Y retired on 1st April, 2021 and it was agreed that:
(i) Goodwill of the firm is valued at ` 1,12,500 and Y's share of
it be adjusted into the accounts of X and Z who are
going to share future profits in the ratio of 3 : 2.
(ii) Fixed Assets be appreciated by 20%.
(iii) Stock be reduced to `
75,000.
(iv) Y be paid amount brought in by X and Z so as
to make their capitals proportionate to their new profit-sharing ratio.
Prepare Revaluation Account, Capital Accounts of all partners and the Balance
Sheet of the New Firm.
Answer:
Revaluation Account |
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Dr. |
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Cr. |
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Particulars |
Amount ( `) |
Particulars |
Amount ( `) |
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Stock |
7,500 |
Fixed Assets |
37,500 |
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Revaluation Profit |
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X’s Capital A/c |
15,000 |
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Y’s Capital A/c |
9,000 |
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Z’s Capital A/c |
6,000 |
30,000 |
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37,500 |
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37,500 |
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Partners’ Capital Accounts |
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Dr. |
Cr. |
|||||||
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
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Y’s Capital A/c |
11,250 |
|
22,500 |
Balance b/d |
1,65,000 |
84,000 |
66,000 |
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Bank |
|
1,33,500 |
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General Reserve |
11,250 |
6,750 |
4500 |
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Balance c/d |
2,20,500 |
|
1,47,000 |
Revaluation (Profit) |
15,000 |
9,000 |
6,000 |
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X’s Capital A/c |
|
11,250 |
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Z’s Capital A/c |
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22,500 |
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Bank A/c |
40,500 |
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93,000 |
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2,31,750 |
1,33,500 |
1,69,500 |
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2,31,750 |
1,33,500 |
1,69,500 |
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Balance
Sheet as
on March 31, 2021 |
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Liabilities |
Amount ( `) |
Assets |
Amount ( `) |
|
Sundry Creditors |
39,750 |
Bank |
15,000 |
|
Employees Provident Fund |
5,250 |
Debtors |
97,500 |
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Capitals: |
|
Stock |
75,000 |
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X |
2,20,500 |
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Fixed Assets |
2,25,000 |
Z |
1,47,000 |
72,000 |
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4,12,500 |
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4,12,500 |
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Working Notes:
New Capital = 1,80,000 + 54,000 + 1,33,500 = ` 3,67,500
X's New Capital=3,67,500×3/5=2,20,500
Z's New Capital=3,67,500×2/5=1,47,500
X brings in ` 40,500
(2,20,500 – 1,80,000)
Z brings in ` ` 93,000 (1,47,500 – 54,000)
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Chapter-6: Retirement of a partner | 2021-2022
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