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

Commerce Accountancy Chapter 5 - Admission Of A Partner

Page No 5.108:

Question 86:

Following is the Balance Sheet of Abha and Binay as at 31st March, 2014:


Liabilities		`	Assets		`
Creditors		13,000	Bank		15,000
Employees Provident Fund		8,000	Debtors	22,000
Workmen Compensation Fund		15,000	Less : Provision for Doubtful Debts	1,000	21,000
Capital A/cs:			Stock		10,000
Abha	55,000		Plant and Machinery		60,000
Binay	30,000	85,000	Goodwill		10,000
			Profit and Loss		5,000


		1,21,000			1,21,000

Chitra was admitted as a partner for 1/4th share in the profits of the firm. It was decided that:
(a) Bad Debts amounted to   ` 1,500 will be written off.
(b) Stock worth   ` 8,000 was taken over by Abha and Binay at Book Value in their profit-sharing ratio. The remaining stock was valued at   ` 2,500.
(c) Plant and Machinery and Goodwill were valued at   ` 32,000 and   ` 20,000 respectively.
(d) Chitra brought her share of goodwill in cash.
(e) Chitra will bring proportionate capital and the capitals of Abha and Binay will be adjusted in their profit-sharing ratio by bringing in or paying off cash as the case may be.
Prepare Revaluation Account and Partners' Capital Accounts.

Answer:

Revaluation Account
Dr.					Cr.
Particulars			Amount `		Particulars				Amount `
Bad debts			500		Stock				500
Plant and Machinery			28,000		Loss on Revaluation
					Abha’s Capital A/c		14,000
					Binay’s Capital A/c		14,000		28,000

			28,500						28,500

Partners’ Capital Accounts
Dr.										Cr.
Particulars	Abha	Binay	Chitra	Particulars		Abha		Binay		Chitra
Revaluation	14,000	14,000		Balance b/d		55,000		30,000
Goodwill	5,000	5,000		Bank						18,000
Profit and Loss	2,500	2,500		Premium for Goodwill		2,500		2,500
Stock	4,000	4,000		WCF		7,500		7,500
Balance c/d	39,500	14,500	18,000
	65,000	40,000	18,000			65,000		40,000		18,000
Bank	12,500			Balance c/d		39,500		14,500		18,000
Balance c/d (adjusted)	27,000	27,000	18,000	Bank				12,500
	39,500	27,000	18,000			39,500		27,000		18,000

Working Notes:

WN1 Calculation of Chitra's Capital

Chitra's Capital=Total Adjusted Capital of Abha and Binay×Reciprocal of Combined Profit Share×Chitra's Profit Share

Abha's Adjusted Capital =55,000+2,500+7,500-14,000-5,000-2,500-4,000= ` 39,500

Binay's Adjusted Capital=30,000+2,500+7,500-14,000-5,000-2,500-4,000= ` 14,500

Chitra's Capital=(39,500+14,500)×4/3×1/4= ` 18,000

WN2 Calculation of New Capital

New Capital=Total Adjusted Capital×Respective Partner's Profit Share

Abha's New Capital=(39,500+14,500)×1/2= ` 27,000

Binay's New Capital=(39,500+14,500)×1/2= ` 27,000

WN3 Calculation of Chitra's Share of Goodwill

Chitra's Share=Firm's Goodwill×Chitra's Profit Share

=20,000×1/4= ` 5,000

` 5,000 will be shared between Abha and Binay in sacrificing ratio 1:1

Page No 5.109:

Question 87: Raman and Rohit were partners in a firm sharing profits and losses in the ratio of 2: 1. On 31st March, 2018, their Balance Sheet was as follows:

BALANCE SHEET OF RAMAN AND ROHIT as at 31st March, 2018
Liabilities		`	Assets		`
Capitals: Raman Rohit	1,40,000 1,00,000	240,000 40,000 1,60,000	Plant and Machinery Furniture and Fixtures Stock		1,75,000 65,000 47,000 1,03,000 50,000
Workmen Compensation Fund Creditors			Debtors Less: Provision for Doubtful Debts	1,10,000 7,000
			Bank Balance
		4,40,000			4,40,000

On the above date, Saloni was admitted in the partnership firm. Raman surrendered 2/5th of his share

and Rohit surrendered 1/5th of his share in favour of Saloni. It was agreed that:

(i) Plant and machinery will be reduced by `35,000 and furniture and fixtures will be reduced to `58,500.

(ii) Provision for bad and doubtful debts will be increased by `3,000.

(iii) A claim for `16,000 for workmen's compensation was admitted.

(iv) A liability of `2,500 included in creditors is not likely to arise.

(v) Saloni will bring `42,000 as her share of goodwill premium and proportionate capital.

Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the reconstituted firm. (CBSE 2019)

Answer;

	Revaluation Account
	Dr.								Cr.
	Particulars				Amount `				Particulars						Amount `
	Plant and Machinery				35,000				Creditors						2,500
	Furniture and fixtures				6,500				Loss transferred to;
	Provision of doubtful debts				3,000				Raman’s Capital A/c(42,000×2/3)				28,000
									Rohit’s Capital A/c(42,000×1/3)				14,000		42,000

					44,500										44,500

	Partners’ Capital Accounts
	Dr.															Cr.
	Particulars			Abha		Binay		Chitra		Particulars		Abha		Binay		Chitra
	To Revaluation			28,000		14,000				By Balance b/d		140,000		1,00,000
	To Balance c/d			1,61,600		1,02,400
										By Premium		33,600		8,400
										By W.C.F.		16,000		8,000

				1,89,600		1,16,400						1,89,600		1,16,400
	To Balance c/d			1,61,600		1,02,400		1,32,000		Balance c/d		39,500		14,500
										Bank A/c				12,500		1,32,000
				1,61,600		1,02,400		1,32,000				1,61,600		1,02,400		1,32,000

Balance Sheet as on April 31, 2019
Liabilities			Amount `				Assets				Amount `
Creditors			1,57,500				Plant and Machiner Firniture and fixture				1,40,000 58,500
							Stock				47,000
worker compensation liabilities			16,000				Debtors 1,10,000 Less; Prov. For D.D. 10,000				1,00,000
Capital A/cs:							Cash at Bank				2,24,000
Raman		1,61,600					(50,000+1,32,000+42,000)
Rohit		1,02,400
Saloni		1,32,000	3,96,000

			5,69,500								5,69,500

Working note;

WN-1

Calculation of old and sacrificing ratio

Old ratio Raman: Rohit=2:1

Raman surrenders to Saloni=2/3×2/5=4/15

Rohit surrenders to Saloni=1/3×1/5=1/15

New share of -

Raman=2/3-4/15=10-4/15=6/15

Rohit=1/3-1/15=5-1/15=4/15

Saloni=4/15+1/15+5/15

Therefore new ratio of Raman, Rohit and Saloni =6:4:5

Sacrificing ratio= old – new

Raman=2/3-6/15=10-6/15=4/15

Rahit=1/3-4/15=5-4/15=1/15

WN-1

Calculation of Capital of Raman and Rohit=1,61,600+1,02,400=2,64,000

Share of Raman and Rohit=6/15+4/15=6+4/15=10/15

Therefore, Capital of Raman , Rohit and Saloni=2,64,000×15/10=3,96,000

Saloni’s capital=3,96,000×5/15=1,32,000

Page No 5.109:

Question 88: A and B are partners in a firm sharing profits and losses in the ratio 3: 1. They admit C for 1/4th share on 31st March, 2014 when their Balance Sheet was as follows:

Liabilities		`	Assets		`
Employees' Provident Fund		17,000	Cash		6,100
Workmen Compensation Reserve		6,000	Stock		15,000
Investment Fluctuation Reserve		4,100	Debtors Less: Provision for Doubtful Debts	50,000 2,000	48,000
A’s Capital a/c B’s Capital a/c	54,000 35,000	89,000	Investments Goodwill		7,000 40,000

		1,16,100			1,16,100

The following adjustments were agreed upon:

(a) C brings in `16,000 as goodwill and proportionate capital.

(b) Bad debts amounted to `3,000.

(d) Liability on account of Workmen Compensation Reserve amounted to `2,000.

Prepare Revaluation Account and Partners' Capital Accounts. (CBSE Sample Paper 2015)

Answer:

Revaluation A/c
Particulars	`	Particulars	`
To Bad debts	1,000	By Loss transferred to: (WN1) A’s Capital a/c B’s Capital a/c	750 250

	1,000		1,000

Capital A/c
Particulars	A	B	C	Particulars	A	B	C
To revaluation a/c To Goodwill a/c To Balance c/d	750 30,000 39,450	250 10,000 30,150	- - 23,200	By Balance b/d By Investment Fluctuation Fund (WN2) By Worker compensation Reserve a/c By Cash a/c (WN5) By Premium a/c (WN4)	54,000 1,200 3,000 - 12,000	35,000 400 1,000 - 4,000	- - - 23,200 -
	2,12,200	1,74,800	1,00,000		2,12,200	1,74,800	1,00,000

Working Notes;

WN1 Distribution of Revaluation Loss in 3: 1

A=1,000×3/4=750

B=1,000×1/4=250

WN2 Investment fluctuation Reserve in 3:1

Decreased value of investment=7,000-4,500=2,500

Balance of Investment fluctuation reserve = 4,100-2,500=1,600

A = 1,600×3/4 = 1,200

B = 1,600×1/4 = 400

WN3 Workers compensation Reserve in 3:1

Balance of Workers compensation reserve = reserve- Claim amount

=6,000-2,000=4,000

A = 4,000×3/4 = 3,000

B = 4,000×1/4 = 1,000

WN4 Distribution of Premium in Sacrificing Ratio 3:2

A = 16,000×3/4 = 12,000

B = 16,000×1/4 = 4,000

WN5 Capital brought by new partner

Total Adjusted Capital of A and B =39,450 + 30,150=69,600

Total profit sharing ratio of A and B = 1/1-1/4=3/4

Proportionate Capital Brought by C = 69,600×1/4=23,200

Page No 5.110:

Question 89:

L, M and N were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their Balance Sheet on 31st March, 2015 was as follows:


Liabilities		`	Assets	`
Creditors		1,68,000	Bank	34,000
General Reserve		42,000	Debtors	46,000
Capital's A/cs: L	1,20,000		Stock	2,20,000
M	80,000		Investments	60,000
N	40,000	2,40,000	Furniture	20,000
			Machinery	70,000

		4,50,000		4,50,000

On the above date, O was admitted as a new partner and it was decided that:
(i) The new profit-sharing ratio between L, M, N and O will be 2 : 2 : 1 : 1.
(ii) Goodwill of the firm was valued at   ` 1,80,000 and O brought his share of goodwill premium in cash.
(iii) The market value of investments was   ` 36,000.
(iv) Machinery will be reduced to   ` 58,000.
(v) A creditor of   ` 6,000 was not likely to claim the amount and hence was to be written off.
(vi) O will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm.

(Al 2016)

Answer:

Revaluation Account
Dr.					Cr.
Particulars	Amount `	Particulars		Amount `
Investments	24,000	Creditors		6,000
Machinery	12,000	Loss on Revaluation
		L’s Capital A/c	15,000
		M’s Capital A/c	10,000
		N’s Capital A/c	5,000	30,000

	36,000			36,000

Partners’ Capital Account
Dr.									Cr.
Particulars	L	M	N	O	Particulars	L	M	N	O
Reval. A/c	15,000	10,000	5,000		Balance b/d	1,20,000	80,000	40,000
Balance c/d	1,56,000	84,000	42,000	56,400	Gen. Reserve	21,000	14,000	7,000
					Premium for G/w	30,000
					Cash A/c				56,400

	1,71,000	94,000	47,000	56,400		1,71,000	94,000	47,000	56,400

Balance Sheet as on March 31, 2015
Liabilities		Amount `	Assets	Amount `
Creditors		1,62,000	Bank (34,000+56,400+30,000)	1,20,400
Capitals:			Debtors	46,000
L	1,56,000		Stock	2,20,000
M	84,000		Investments	36,000
N	42,000		Furniture	20,000
O	56,400	3,38,400	Machinery	58,000
		5,00,400		5,00,400

Working Notes:

WN1: Calculation of Sacrificing Ratio
Sacrificing Ratio =Old ratio- new ratio

L= 3/6-2/6=1/6

M=2/6-2/6=Nil

N=1/6-1/6=- Nil

WN2: Adjustment of Goodwill
O‘s of goodwill=1,80,000×1/6=30,000

30,000 will be credited to L’s capital because he is only sacrifice.

WN3 Calculation of O’s Proportionate Capital

Adjusted old capital of L =

Adjusted old capital of M =

Adjusted old capital of N =

O’s proportion capital=Total adjusted capital×O’s profit share × reciprocal combined new share of old partners

=2,82,000×1/6×6/5=56,400

Page No 5.110:

Question 90: Leena and Rohit are partners in a firm sharing profits in the ratio of 3: 2. On 31st March, 2018, their

Balance Sheet was as follows:

BALANCE SHEET OF LEENA AND ROHIT as at 31st March, 2018

Liabilities		`	Assets		`
Sundry Creditors Bills Payable General Reserve Capitals:		80,000 38,000 50,000	Cash		42,000
			Debtors Less: Provision for Doubtful Debts	1,32,000 2,000	1,30,000
			Stock Plant and Machinery		1,46,000 1,50,000
Leena Rohit	1,60,000 1,40,000	3,00,000	Stock Plant and Machinery		1,46,000 1,50,000
		4,68,000			4,68,000

On the above date Manoj was admitted as a new partner for 1/5th share in the profits of the firm on the following terms:

(i) Manoj brought proportionate capital. He also brought his share of goodwill premium of ` 80,000 in cash.

(ii) 10% of the general reserve was to be transferred to provision for doubtful debts.

(iii) Claim on account of workmen's compensation amounted to `40,000.

(iv) Stock was overvalued by `16,000.

(v)Leena, Rohit and Manoj will share future profits in the ratio of 5:3:2.

Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm. (CBSE 2019)

Answer:

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



To workers’ compensation Liabilities To Stock	40,000 16,000	By loss transferred to ; Rohit×3/5=33,600 Leena×2/5=22,400	56,000
	56,000		56,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	Leena	Rohit	Manoj	Particulars	Leena	Rohit	Manoj
To Revaluation a/c	32,600	22,400		By Balance b/d	160,000	140,000
To Balance c/d	1,93,400	1,75,600	92,250	By Premium a/c	40,000	40,000
				By General reserve A/c By Cash a/c	27,000	18,000	92,250

	2,27,000	1,98,000	92,250		2,27,000	1,98,000	92,250

Balance Sheet as on March 31, 2019 after Leander’s admission
Liabilities	Amount `	Assets		Amount `
Creditors Bills payables Workers’ compensation liabilities	80,000 38,000 40,000	Cash (42,000+80,000+92,250) Debtors Less; prov. For doubtful debts	1,32,000 7,000	2,14,250 1,25,000
Capital a/c; Leena 1,93,400 Rohit 1,75,600 Manoj 92,250	4,61,250	Stock Plant and machinery		1,30,000 1,50,000






	6,19,250			6,19,250