Volume-1 | Chapter-5 | Question: 76 to 80 | Admission Of A Partner | Ts grewal solution 2020-21 | Class-12th

Page No 5.100:

Question 76:

Following is the Balance Sheet of X and Y as at 31st March, 2019 who are partners in a firm sharing profits and losses in the ratio of 3 : 2 respectively:
 

Liabilities

Amount
 `

Assets

Amount  `

Creditors

45,000

Cash at Bank

15,000

General Reserve

 

36,000

Debtors

60,000

 

Capital A/cs:

 

 

Less: Provision for Doubtful Debts

2,400

57,600

X

1,80,000

 

Patents

 

44,400

Y

90,000

2,70,000

Investments

24,000

Current A/cs:

 

Fixed Assets

 

2,16,000

X

30,000

 

Goodwill

30,000

Y

6,000

36,000

 

 

 

 

 

 

 

 

3,87,000

 

3,87,000

 

 

 

 


Z is admitted as a new partner on 1st April, 2019 on the following terms:
(a) Provision for doubtful debts is to be maintained at 5% on Debtors.
(b) Outstanding rent amounted to  
 ` 15,000.
(c) An accrued income of  
 ` 4,500 does not appear in the books of the firm. It is now to be recorded.
(d) X takes over the Investments at an agreed value of  
 ` 18,000.
(e) New Profit-sharing Ratio of partners will be 4 : 3 : 2.
(f) Z will bring in  
 ` 60,000 as his capital by cheque.
(g) Z is to pay an amount equal to his share in firm's goodwill valued at twice the average profit of the last three years which were  
 ` 90,000;    ` 78,000 and    ` 75,000 respectively.
(h) Half of the amount of goodwill is to be withdrawn by X and Y.  
You are required to pass Journal entries, prepare Revaluation Account, Partners' Capital and Current Accounts and the Balance Sheet of the new firm.



Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

 `

Particulars

Amount

 `

Prov. for D. Debts

600

Accrued Income

4,500

Outstanding Rent

15,000

Loss transferred to

 

Investments

6,000

  X’s Current A/c

10,260

 

 

  Y’s Current A/c

6,840

 

 

 

 

 

21,600

 

21,600

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

 

 

 

 

Balance b/d

1,80,000

90,000

 

Balance c/d

1,80,000

90,000

60,000

Bank

 

 

60,000

 

1,80,000

90,000

60,000

 

1,80,000

90,000

60,000

 

 

 

 

 

 

 

 

 

Partners’ Current Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Revaluation

10,260

6,840

 

Balance b/d

30,000

6,000

 

Goodwill

18,000

12,000

 

General Reserve

21,600

14,400

 

Bank

12,600

5,400

 

Premium for Goodwill

25,200

10,800

 

Investments

18,000

 

 

 

 

 

 

Balance c/d

17,940

6,960

 

 

 

 

 

 

76,800

31,200

 

 

76,800

31,200

 

 

 

 

 

 

 

 

 

 

Balance Sheet
as on 1st April, 2019

Liabilities

Amount

 `

Assets

Amount

 `

Capital A/cs:

 

Patents

44,400

X

1,80,000

 

Fixed Assets

2,16,000

Y

90,000

 

Accrued Income

4,500

Z

60,000

3,30,000

Cash at Bank (15,000 + 96,000 – 18,000)

93,000

Outstanding Rent

15,000

Debtors

60,000

 

Current A/cs:

 

Less: 5% Reserve for D. Debts

3,000

57,000

X

17,940

 

 

 

Y

6,960

24,900

 

 

Creditors

 

45,000

 

 

 

4,14,900

 

4,14,900

 

 

 

 

 

Journal

Particulars

L.F.

Debit

Amount

 `

Credit

Amount

 `

Bank A/c

Dr.

 

96,000

 

To Z’s Capital

 

 

60,000

To Premium for Goodwill

 

 

36,000

(Z brought Capital and share of goodwill)

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

36,000

 

To X’s Current A/c

 

 

25,200

To Y’s Current A/c

 

 

10,800

(Premium for Goodwill transferred to partners
current account in sacrificing ratio i.e. 7:3)

 

 

 

 

 

 

 

X's Current A/c                                            Dr.

 

12,600

 

Y's Current A/c                                            Dr.

 

5,400

 

  To BankA/c

 

 

18,000

(Half of goodwill withdrawn by partners)

 

 

 


Working Notes:

WN1 Calculation of Z's Share of Premium for Goodwill

Average Profits=90,000+78,000+75,0003= 
 ` 81,000

Firm's Goodwil=81,000×2=   ` 1,62,000

Z's share=1,62,000×29=   ` 36,000

   ` 36,000 will be distributed between X and Y in sacrificing ratio.

WN2 Calculation of  Sacrificing Ratio

Sacrificing Ratio=Old Ratio-New Ratio

X's sacrifice=3/5-4/9=7/45

Y's sacrifice=2/5-3/9=3/45

Sacrificing Ratio=7 : 3

WN3 Calculation of Share of Premium of Goodwill

X's share=36,000×710= 
 ` 25,200

Y's share=36,000×310=   ` 10,800

WN4 Distribution of Loss on Revaluation


X's share=17,100×35= 
 ` 10,260

Y's share=17,100×25=   ` 6,840



Page No 5.101:

Question 77:

X and Y are partners sharing profits equally. Their Balance Sheet as on 31st March, 2019 is given below:  

 

Liabilities

Amount
 `

Assets

Amount
 `

Capital A/cs:

 

Land and Building

1,50,000

 X

1,50,000

 

Plant and Machinery

1,00,000

 Y

1,00,000

2,50,000

Furniture and Fittings

25,000

Current A/cs:                                     

 

Stock

 

75,000

 X

40,000

 

Debtors

75,000

 

 Y

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

 

 

 

 


Z 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) X 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

 

 

 

  X’s Current A/c

2,500

 

 

  Y’s Current A/c

2,500

 

 

 

 

 

12,500

 

12,500

 

 

 

 

 

Partners’ Current Accounts

Dr.

                                                                                            Cr.

Particulars

X

Y

Particulars

X

Y

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

X

Y

Z

Particulars

X

Y

Z

 

 

 

 

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, 2019

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

X

1,87,500

 

Stock

75,000

Y

1,27,500

 

Bills Receivables

30,000

Z

1,25,000

4,40,000

Bank (50,000 + 1,25,000 + 50,000)

2,25,000

X'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 5.101:

Question 78:



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 2019

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 5.102:

Question 79:

X and Y are partners sharing profits in the ratio of 2 : 1. Their Balance Sheet as at 31st March, 2019 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, 2019 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

 `

2019

 

 

 

 

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, 2019 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 5.102:

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, 2019 was: Cash    ` 1,000; Sundry Debtors    ` 15,000; Stock    ` 22,000; Plant and Machinery    ` 4,000; Sundry Creditors    ` 2,000; Bank Overdraft    ` 15,000; A's Capital    ` 15,000; B's Capital    ` 10,000. 
On 1st April, 2019 they admitted C into partnership on the following terms:
(a) C to purchase one-quarter of the goodwill for  
 ` 3,000 and provide    ` 10,000 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  
 ` 500 are to be provided for estimated Bad Debts. Stock is to be taken at a valuation of    ` 24,940.
(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%)

400

Stock (24,940 – 22,000)    

2,940

Provision for Bad Debts

500

 

 

Profit transferred to

 

 

 

A Capital

1,360

 

 

B Capital

680

 

 

 

2,940

 

2,940

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

15,000

10,000

 

 

 

 

 

Cash

 

 

10,000

 

 

 

 

Premium for Goodwill

2,000

1,000

 

Balance c/d

18,360

11,680

10,000

Revaluation

1,360

680

 

 

18,360

11,680

10,000

 

18,360

11,680

10,000

Cash

 

1,680

 

Balance c/d

18,360

11,680

10,000

Balance c/d

20,000

10,000

10,000

Cash

1,640

 

 

(Adjusted)

 

 

 

 

 

 

 

 

20,000

11,680

10,000

 

20,000

11,680

10,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2019 after C’s admission

Liabilities

Amount

 `

Assets

Amount

 `

Sundry Creditors

2,000

Cash

13,960

Bank Overdraft

15,000

Sundry Debtors

15,000

 

Capital A/cs:                               

 

Less: Prov. for Bad Debts

500

14,500

A

20,000

 

Stock

24,940

B

10,000

 

Plant and Machinery

3,600

C

10,000

40,000

 

 

 

 

 

 

 

 

57,000

 

57,000

 

 

 

 

 

Cash Account

Dr.

 

Cr.

Particulars

Amount

 `

Particulars

Amount

 `

Balance b/d

1,000

B’s Capital

1,680

C’s Capital

10,000

 

 

Premium for Goodwill    

3,000

 

 

A’s Capital

1,640

Balance c/d                    

13,960

 

 

 

 

 

15,640

 

15,640

 

 

 

 


Working Notes

WN1: Sacrificing Ratio

 

A

B

Old ratio=

2  :

1

 

 

A

B

C

New ratio =

 

1/2  :

1/4  :

¼   =2:1:1

Sacrificing Ratio = old ratio– new ratio

A=2/3-2/4=8-6/12=2/12

B=1/3-1/4=4-3/12=1/12

Sacrificing Ratio of A and B 2;1
WN2: Distribution of Premium for Goodwill
A will get =3,000×2/3=2,000

B will get =3,000×1/3=1,000

WN3: Distribution of Revaluation Profit
A’s share =2040×2/3=1,360

B’s share =2040×1/3=680

WN4: Adjustment of Capitals (in new ratio)
total capital of the firm=10,000×4/1=40,000

A’s share of capital =40,000×2/4=20,000

B’s and C’s share of capital =40,000×1/4=10,000

 


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Chapter-5: Admission Of A Partner 2020

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