Double Entry Book Keeping Ts Grewal Volume I 2021-2022 Solutions for Class 12

Commerce Accountancy Chapter 5 - Admission Of A Partner

Page No 5.103:

Question 76:

X and Y are partners sharing profits equally. Their Balance Sheet as on 31st March, 2021 is given below:


Liabilities		Amount `	Assets		Amount `
Capital A/cs:			Land and Building		1,50,000
Shiv	1,50,000		Plant and Machinery		1,00,000
Mohan	1,00,000	2,50,000	Furniture and Fittings		25,000
Current A/cs:			Stock		75,000
Shiv	40,000		Debtors	75,000
Mohan	30,000	70,000	Less: Provision for Doubtful Debts	5,000	70,000
Creditors		1,30,000	Bills Receivable		30,000
Bills Payable		50,000	Bank		50,000

		5,00,000			5,00,000

Jea is admitted as a new partner for 1/4th share under the following terms:
(a) Z is to introduce   ` 1,25,000 as capital.
(b) Goodwill of the firm was valued at nil.
(c) It is found that the creditors included a sum of   ` 7,500 which was not to be paid. But it was also found that there was a liability for Compensation to Workmen amounting to   ` 10,000.
(d) Provision for doubtful debts is to be created @ 10% on debtors.
(e) In regard to the Partners' Capital Accounts, present Fixed Capital Account Method is to be converted into Fluctuating Capital Account Method.
(f) Bills of   ` 20,000 accepted from creditors were not recorded in the books.
(g) Shiv provides   ` 50,000 loan to the business carrying interest @ 10% p.a.
You are required to prepare Revaluation Account, Partners' Capital Accounts, Bank Account and the Balance Sheet of the new firm.

Answer:

Revaluation Account
Dr.			Cr.
Particulars	Amount `	Particulars	Amount `
Reserve for D. Debts	2,500	Creditors	7,500
Liability for WCF	10,000	Loss transferred to
		Shiv’s Current A/c	2,500
		Mohan’s Current A/c	2,500

	12,500		12,500

Partners’ Current Accounts
Dr.	Cr.
Particulars	Shiv	Mohan	Particulars	Shiv	Mohan
Revaluation A/c	2,500	2,500	Balance b/d	40,000	30,000
Balance c/d	37,500	27,500
	40,000	30,000		40,000	30,000

Partners’ Capital Accounts
Dr.								Cr.
Particulars	Shiv	Mohan	Jea	Particulars	Shiv	Mohan	Jea
				Balance b/d	1,50,000	1,00,000	-
				Current A/c	37,500	27,500	-
Balance c/d	1,87,500	1,27,500	1,25,000	Bank			1,25,000
	1,87,500	1,27,500	1,25,000		1,87,500	1,27,500	1,25,000

Balance Sheet as on 1st April, 2021
Liabilities		Amount `	Assets		Amount `
Creditors (1,30,000 – 7,500 – 20,000)		1,02,500	Land and Building		1,50,000
Bills Payable (50,000 + 20,000)		70,000	Plant and Machinery		1,00,000
Capital A/cs:			Fixture and Fittings		25,000
Shiv	1,87,500		Stock		75,000
Mohan	1,27,500		Bills Receivables		30,000
Jea	1,25,000	4,40,000	Bank (50,000 + 1,25,000 + 50,000)		2,25,000
Shiv's Loan		50,000	Debtors	75,000
Liability for WCF		10,000	Less: 10% Reserve for D. Debts	7,500	67,500


		6,72,500			6,72,500

Page No 5.104:

Question 77: Badal and Bijli were partners in a firm sharing profits in the ratio of 3 2. Their Balance Sheet as at 31st March, 2019 was as follows:

BALANCE SHEET OF BADAL AND BIJLI as at 31st March, 2019
Liabilities		`	Assets	`
Capital A/cs:			Building	1,50,000
Badal Bijli	1,50,000 90,000	2,40,000	Investments Stock	73,000 43,000
Badal's Current A/c Investment Fluctuation Reserve Bills Payable Creditors		12,000 24,000 8,000 26,000	Debtors Cash Bijli's Current A/c	20,000 22,000 2,000
		3,10,000		3,10,000

Raina was admitted on the above date as a new partner for 1/6th share in the profits of the firm. The terms of agreement were as follows:

(i) Raina will bring `40,000 as her capital and capitals of Badal and Bijli will be adjusted on the basis of Raina's capital by opening Current Accounts.

(ii) Raina will bring her share of goodwill premium for `12,000 in cash.

(iii) The building was overvalued by 15,000 and stock by `3,000.

(iv) A provision of 10% was to be created on debtors for bad debts.

Prepare the Revaluation Account and Current and Capital Accounts of Badal, Bijli and Raina. (CBSE 2020)

Answer:

Revaluation a/c
Particulars	`	Particulars	`
To Building a/c To Stock To Prevision for doubtful Debts	15,000 3,000 2,000	By Loss Transferred to: Badal’s Capital a/c - 12,000 Bijli’s Capital a/c - 8,000	20,000
	20,000		20,000

Partners’ Capital a/c
Particulars	Badal	Bijli	Raina	Particulars	Badal	Bijli	Raina
To Badal’s Current a/c To Bijli’s Current a/c To Balance c/d	30,000 - 1,20,000	- 10,000 80,000	- - 40,000	By Balance B/d By Cash a/c	1,50,000 -	90,000 -	- 40,000
	1,50,000	90,000	40,000		1,50,000	90,000	40,000

Partners’ Current a/c
Particulars	Badal	Bijli	Raina	Particulars	Badal	Bijli	Raina
To Balance B/d To Revaluation a/c To Balance c/d	- 12,000 51,600	2,000 8,000 14,400	- - -	By Balance B/d By I. F . R By Premium By Badal’s Capital a/c By Bijli’s Capital a/c	12,000 14,400 7,200 3,000 -	- 9,600 4,800 - 10,000	- - - - -
	1,05,600	62,400	-		1,05,600	62,400	-

Working Notes:

1. Calculation of Sacrificing Ratio

Sacrifice = Old Profit Share - New Profit Share

Old Ratio of Badal and Bijli = 3 :2

Share of Raina is 1/6

Calculation of new profit sharing ratio

Assuming whole profit sharing ratio is 1/1

Remaining profit sharing ratio is 1/1-1/6=5/6

Share share of Badal and Bijli in Remaining share

Badal= 5/6×3/5=15/30

Bijali= 5/6×2/5=10/30

	Badal	:	Bijli	:	Raina
	15/30	:	10/30	:	1/6
	15/30	:	10/30	:	5/30
New ratio =	3	:	2	:	1

Badal’s Sacrifice = 3

Bijli’s Sacrifice = 2;

Raina’s gaining = 1/6

2. Goodwill for 1/6th share of Raina = `12,000

Goodwill payable to Badal and Bijli

Badal=12,000×3/5=7,200

Bijli=12,000×2/5=4,800

3. Capital of the Partners in the New firm on the basis of Raina's Capital:

Raina's Capital `40,0000

Raina 's Share of Profit 1/6 for that he brings 40,000

Total Capital of the New Firm = 40,000×6/1=2,40,000

Thus,

Badal's Capital = 2,40,000 × 3/6 = `1,20,000;

Bijli's Capital = 2,40,000 × 2/6 = `80,000;

Raina's Capital = 2,40,000 × 1/6 = `40,000;

Page No 5.104:

Question 78: Gautam and Yashica are partners in a firm, sharing profits and losses in 3: 1 respectively. The Balance Sheet of the firm as on 31st March, 2018 was as follows:

BALANCE SHEET as at 31st March, 2018
Liabilities		`	Assets	`
Sundry Creditors Bills Payable		50,000 30,000 5,00,000	Furniture Stock Debtors Cash in Hand Machinery	60,000 1,40,000 80,000 90,000 2,10,000
Capitals: Gautamn Yashica	4,00,000 1,00,000
		5,80,000		5,80,000

Asma is admitted as a partner for 3/8th share in the profits with a capital of `2,10,000 and `50,000 for

her share of goodwill. It was decided that:

(i) New profit-sharing ratio will be 3:2:3.

(ii) Machinery will depreciated by 10% and Furniture by `5,000.

(iii) Stock was revalued at `2,10,000.

(iv) Provision for doubtful debts is to be created at 10% of debtors.

(v) The capitals of all the partners were to be in the new profit-sharing ratio on basis of capital of new partner. Any adjustment to be done through Current Accounts.

Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm.

(CBSE Sample Paper 2021)

Answer:

Revaluation Account
			Cr.
Particulars	`	Particulars	`
To plant and machinery a/c To Furniture a/c To Provision for doubtful debts	21,000	By Stock a/c	70,000
	5,000
	8,000
To profit Gautam’s capital a/c 36,000×3/4=27,000 Yashika’s Capital a/c 36,000×1/4=9,000	36,000

	70,000		70,000

hjhjh

Partners’ Capital A/c
Particulars	Gautam	Yashika	Asma	Particulars	Gautam	Yashika	Asma
To Balance C/d	4,77,000	1,09,000	2,10,000	By Balance b/d By Cash By Premium a/c By Revaluation a/c	4,00,000 50,000 27,000	1,00,000 9,000	2,10,000
	4,77,000	1,09,000	2,10,000		4,77,000	1,09,000	2,10,000
To G’s Current a/c To Balance C/d	2,67,000 2,10,000	1,40,000	2,10,000	By Balance b/d By Y’s Current a/c	4,77,000	1,09,000 31,000	2,10,000
	4,77,000	1,40,000	2,10,000		4,77,000	1,40,000	2,10,000

hjhjh

Balance sheet as at 1sh April 2021
Liabilities	`	Assets	`
Sundry creditors bills payable Capital a/c Gautam =2,10,000 Yashika =1,40,000 Ashma=2,10,000 Gautam’s current a/c	50,000 30,000 5,60,000 2,67,000	Furniture Stock Debtors 80,000 Less: Prov. For D.D. 8,000 Cash Machinery Yashika’s Current a/c	55,000 2,10,000 72,000 3,50,000 1,89,000 31,000
	9,07,000		9,07,000

Working notes;

WN-1

Calculation of old ratio and sacrificing ratio

Old ratio Gautam : Yashika = 3:1

New ratio Gautam : Yashika : Asma= 3:2:3

Sacrificing ratio= Old ratio – New Ratio

Gautam =3/4-3/8=6-3/8=3/8

Yashika=1/4-2/8=2-2/8=0/8

Therefore sacrificing ratio of Gautam : Yashika = 3:0

WN-2

Calculation of Capital

Total Capital of the new firm on the basis of new partner

Total capital new firm = 2,10,000×8/3=5,60,000

New capital of all partners

Gautam=5,60,000×3/8=2,10,000

Yashika=5,60,000×2/8=1,40,000

Asma=5,60,000×3/8=2,10,000

Page No 5.105:

Question 79:

X and Y are partners sharing profits in the ratio of 2 : 1. Their Balance Sheet as at 31st March, 2021 was:


Liabilities		`	Assets	`
Sundry Creditors		25,000	Cash/Bank	5,000
General Reserve		18,000	Sundry Debtors	15,000
Capital A/cs:			Stock	10,000
X	75,000		Investments	8,000
Y	62,000	1,37,000	Printer	5,000
			Fixed Assets	1,37,000



		1,80,000		1,80,000

They admit Z into partnership on the same date on the following terms:
(a) Z brings in   ` 40,000 as his capital and he is given 1/4th share in profits.
(b) Z brings in   ` 15,000 for goodwill, half of which is withdrawn by old partners.
(c) Investments are valued at   ` 10,000. X takes over Investments at this value.
(d) Printer is to be reduced (depreciated) by 20% and Fixed Assets by 10%.
(e) An unrecorded stock of Stationery on 31st March, 2021 is   ` 1,000.
(f) By bringing in or withdrawing cash, the Capitals of X and Y are to be made proportionate to that of Z on their profit-sharing basis.
Pass Journal entries, prepare Revaluation Account, Capital Accounts and new Balance Sheet of the firm.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount `	Credit Amount `
2021
April 1	Revaluation A/c	Dr.		14,700
	To Typewriter A/c				1,000
	To Fixed Assets A/c				13,700
	(Decrease in value of typewriter and fixed assets transferred to Revaluation Account)

April 1	Stationery A/c	Dr.		1,000
	Investment A/c	Dr.		2,000
	To Revaluation A/c				3,000
	(Increase in stationery and investment transferred to Revaluation Account)

April 1	X’s Capital A/c	Dr.		7,800
	Y’s Capital A/c	Dr.		3,900
	To Revaluation A/c				11,700
	(Revaluation loss transferred to X and Y’s Capital Account in their old ratio)

April 1	Reserve Fund A/c	Dr.		18,000
	To X’s Capital A/c				12,000
	To Y’s Capital A/c				6,000
	(Reserve Fund distributed)

April 1	Cash A/c	Dr.		55,000
	To Z’s Capital A/c				40,000
	To Premium for Goodwill A/c				15,000
	(Z brought capital and share of goodwill)

April 1	Premium for Goodwill A/c	Dr.		15,000
	To X’s Capital A/c				10,000
	To Y’s Capital A/c				5,000
	(Premium for Goodwill distributed between X and Y in their sacrificing ratio i.e 2:1)

April 1	X’s Capital A/c	Dr.		5,000
	Y’s Capital A/c	Dr.		2,500
	To Cash				7,500
	(Half of the Premium for Goodwill withdrawn by X and Y)

April 1	X’s Capital A/c	Dr.		10,000
	To Investments A/c				10,000
	(X took over the Investment)

April 1	Cash A/c	Dr.		4,800
	To X’s Capital A/c				4,800
	(X’ brought cash to make up deficiency in capital)

April 1	Y’s Capital A/c	Dr.		26,600
	To Cash A/c				26,600
	(Y withdrew excess capital after all adjustments)

Cash/Bank Account
Dr.			Cr.
Particulars	Amount `	Particulars	Amount `
Balance b/d	5,000	X’s Capital (Goodwill)	5,000
Z’s Capital	40,000	Y’s Capital (Goodwill)	2,500
Premium for Goodwill	15,000	Y’s Capital	26,600
X’s Capital	5,800	Balance c/d	31,700
	65,800		65,800

Revaluation Account
Dr.			Cr.
Particulars	Amount `	Particulars	Amount `

Typewriter (5,000 × 20%)	1,000	Investment	2,000
Fixed Assets (1,37,000 × 10%)	13,700	Stationery	1,000
		Loss transferred to
		X Capital	7,800
		Y Capital	3,900
	14,700		14,700

Partners’ Capital Accounts
Dr.							Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Revaluation	7,800	3,900		Balance b/d	75,000	62,000
Investment	10,000			Reserve Fund	12,000	6,000
Cash (withdraw of goodwill)	5,000	2,500		Cash			40,000
Balance c/d	74,200	66,600	40,000	Premium for Goodwill	10,000	5,000
	97,000	73,000	40,000		97,000	73,000	40,000
Cash		26,600		Balance b/d	74,200	66,600	40,000
Balance c/d adjusted	80,000	40,000	40,000	Cash	5,800
	80,000	66,600	40,000		80,000	66,600	40,000

Balance Sheet as on March 31, 2021 after Z’s admission
Liabilities		Amount `	Assets	Amount `
Sundry Creditors		25,000	Cash	31,700
Capital A/cs:			Sundry Debtors	15,000
X	80,000		Stock	10,000
Y	40,000		Typewriter (5,000 – 1,000)	4,000
Z	40,000	1,60,000	Fixed Assets (1,37,000 – 13,700)	1,23,300
			Stationery	1,000

		1,85,000		1,85,000

Working Notes:

WN1: Sacrificing Ratio

	X	Y
Old ratio	2 :	1
Sacrificing Ratio	2 :	1

WN2: Distribution of Revaluation Loss
revaluation loss transferred to X’s capital =11,700×2/3=7,800

revaluation loss transferred to X’s capital =11,700×1/3=3,900

WN3: Distribution of Premium for Goodwill
A will get =15,000×2/3=10,000

B will get =15,000×1/3=5,000

WN4: Adjustment of Capital
Total Capital of the firm on the basis of Z’s share =40,000×4/1=1,60,000

Total Capital of the firm	=	1,60,000
Less: Z’s Capital	=	40,000
Combined Capital of X and Y	=	1,20,000

Page No 5.105:

Question 80:

A and B are in partnership sharing profits and losses in the proportion of 2/3rd and 1/3rd respectively. Their Balance Sheet as at 31st March, 2021 was: Cash   ` 1,00,000; Sundry Debtors   ` 15,00,000; Stock   ` 22,00,000; Plant and Machinery   ` 4,00,000; Sundry Creditors   ` 2,00,000; Bank Overdraft   ` 15,00,000; A's Capital   ` 15,00,000; B's Capital   ` 10,00,000.
On 1st April, 2021 they admitted C into partnership on the following terms:
(a) C to purchase one-quarter of the goodwill for   ` 3,00,000 and provide   ` 10,00,000 as capital. C brings in necessary cash for goodwill and capital.
(b) Profits and losses are to be shared in the proportion of one-half to A, one-quarter to B and one quarter to C.
(c) Plant and Machinery is to be reduced by 10% and   ` 50,000 are to be provided for estimated Bad Debts. Stock is to be taken at a valuation of   ` 24,94,000.
(d) By bringing in or withdrawing cash the capitals of A and B are to be made proportionate to that of C on their profit-sharing basis.
Prepare necessary Ledger Accounts in the books of the firm relating to the above arrangement and submit the opening Balance Sheet of the new firm.

Answer:

Revaluation Account
Dr.			Cr.
Particulars	Amount `	Particulars	Amount `
Plant and Machinery (4,000 × 10%)	40,000	Stock (24,94,000– 22,00,000)	2,94,000
Provision for Bad Debts	50,000
Profit transferred to
A Capital	1,36,000
B Capital	68,000
	2,94,000		2,94,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	A	B	C	Particulars	A	B	C
				Balance b/d	15,00,000	10,00,000
				Cash			10,00,000
				Premium for Goodwill	2,00,000	1,00,000
Balance c/d	18,36,000	11,68,000	10,00,000	Revaluation	1,36,000	68,000
	18,36,000	11,68,000	10,00,000		18,36,000	11,68,000	10,00,000
Cash		1,68,000		Balance c/d	18,36,000	11,68,000	10,00,000
Balance c/d	20,00,000	10,00,000	10,00,000	Cash	1,64,000
(Adjusted)
	20,00,000	11,68,000	10,00,000		20,00,000	11,68,000	10,00,000

Balance Sheet as on April 01, 2021 after C’s admission
Liabilities		Amount `	Assets		Amount `
Sundry Creditors		2,00,000	Cash		13,96,000
Bank Overdraft		15,00,000	Sundry Debtors	15,000
Capital A/cs:			Less: Prov. for Bad Debts	500	14,50,000
A	20,00,000		Stock		24,94,000
B	10,00,000		Plant and Machinery		3,60,000
C	10,00,000	40,00,000

		57,00,000			57,00,000

Cash Account
Dr.			Cr.
Particulars	Amount `	Particulars	Amount `
Balance b/d	1,00,000	B’s Capital	1,68,000
C’s Capital	10,00,000
Premium for Goodwill	3,00,000
A’s Capital	1,64,000	Balance c/d	13,96,000

	15,64,000		15,64,000