Volume-1 | Chapter-5 | Question: 81 to 85 | Admission Of A Partner | Ts grewal solution 2020-21 | Class-12th

Page No 5.103:

Question 81:

  A and B were partners in a firm sharing profits in 3 : 1 ratio. They admitted C as a partner for 1/4th share in the future profits. C was to bring    ` 60,000 for his capital. The Balance Sheet of A and B as at 1st April, 2019, the date on which C was admitted, was:

 

Liabilities

   `

Assets

   `

Capital A/cs:

 

Land and Building

40,000

 A

50,000

 

Plant ad Machinery

70,000

 B

 80,000

 1,30,000

Stock

   30,000

General Reserve

 

10,000

Debtors

35,000

 

Creditors

 

70,000

Less: Provision for Doubtful Debts

1,000

34,000

 

 

Investments

26,000

 

 

Cash

10,000

 

2,10,000

 

2,10,000

 

 

 

 


The other terms agreed upon were:
(a) Goodwill of the firm was valued at  
 ` 24,000.
(b) Land and Building were valued at  
 ` 65,000 and Plant and Machinery at    ` 60,000.
(c) Provision for Doubtful Debts was found in excess by  
 ` 400.
(d) A liability of  
 ` 1,200 included in Sundry Creditors was not likely to arise.
(e) The capitals of the partners be adjusted on the basis of C's contribution of capital to the firm.
(f) Excess of shortfall, if any, be transferred to Current Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.



Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

 `

Particulars

Amount

 `

Plant and Machinery
(70,000 – 60,000)

10,000

Land and Building
(65,000 – 40,000)

25,000

Profit transferred to

 

Provision for Doubtful Debts

400

A Capital

12,450

Creditors

1,200

B Capital

4,150

 

 

 

 

 

 

 

26,600

 

26,600

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

50,000

80,000

 

 

 

 

 

General Reserve

7,500

2,500

 

 

 

 

 

Revaluation (Profit)

12,450

4,150

 

 

 

 

 

Cash

 

 

60,000

Balance c/d

74,450

88,150

60,000

C's Current A/c

4,500

1,500

 

 

74,450

88,150

60,000

 

74,450

88,150

60,000

 

 

 

 

 

 

 

 

B’s Current A/c

 

43,150

 

Balance b/d

74,450

88,150

60,000

Balance c/d (Adjusted)

1,35,000

45,000

60,000

A’s Current A/c

60,550

 

 

 

1,35,000

88,150

60,000

 

1,35,000

88,150

60,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2019 after C’s admission

Liabilities

Amount

 `

Assets

Amount

 `

Creditors (70,000 – 1,200)

68,800

Land and Building

65,000

Capital A/cs:

 

Plant and Machinery

60,000

A

1,35,000

 

Stock

30,000

B

45,000

 

Debtors

35,000

 

C

60,000

2,40,000

Less: Prov. for Doubtful Debts

600

34,400

B’s Current A/c

43,150

Investments

26,000

 

 

Cash

70,000

 

 

A’s Current A/c

60,550

 

 

C's Current A/c

6,000

 

3,51,950

 

3,51,950

 

 

 

 


Working Notes:

WN1

 

A

B

OLD RATION

3  :

1 

SACRIFICING RATIO

3  : 

1 



WN2 
c‘s of goodwill=24,000×1/4=6,000

A will get =6,000×3/4=4,500

B will get =6,000×1/4=1,500

As C has not brought his share of goodwill in cash, hence, his share shall be debited to his current account.

WN3 Distribution of Revaluation Profit
A will get =16,600×3/4=12,450

B will get =16,600×1/4=4,150



WN4 Adjustment of Capital
 

Total Capital of the firm after C’s admission

=

60,000 × 4

=

2,40,000

Less: C’s Capital

 

 

=

60,000

Combined Capital of A and B

 

 

=

1, 80,000

A’s proportion of capital=1,80,000×3/4=1,35,000

B’s proportion of capital =1,80,000×1/4=45,000


WN5

Cash Account

Dr.

 

Cr.

Particulars

Amount

 `

Particulars

Amount

 `

Balance b/d

10,000

Balance c/d

70,000

C’s Capital

60,000

(Balancing Figure)

 

 

70,000

 

70,000

 

 

 

 



Page No 5.103:

Question 82:

Shikhar and Rohit were partners in a firm sharing profits in the ratio of 7 : 3. On 1st April, 2013, they admitted Kavi as a new partner for 1/4th share in profits of the firm. Kavi brought    ` 4,30,000 as his capital and    ` 25,000 for his share of goodwill premium. The Balance Sheet of Shikhar and Rohit as on 1st April, 2013 was as follows:  

BALANCE SHEET OF SHIKHAR AND ROHIT as at 1st April, 2013

Liabilities

   `

Assets

   `

Capital A/cs:

 

Land and Building

3,50,000

Shikhar

8,00,000

 

Machinery

4,50,000

Rohit

3,50,000

11,50,000

Debtors

2,20,000

 

General Reserve

 

1,00,000

Less: Provision

20,000

2,00,000

Workmen's Compensation Fund   

1,00,000

Stock

3,50,000

 Creditors

1,50,000

Cash

1,50,000

 

 

 

 

 

15,00,000

 

15,00,000

 

 

 

 


It was agreed that:
(a) the value of Land and Building will be appreciated by 20%.
(b) the value of Machinery will be depreciated by 10%.
(c) the liabilities of Workmen's Compensation Fund were determined at  
 ` 50,000.
(d) capitals of Shikhar and Rohit will be adjusted on the basis of Kavi's capital and actual cash to be brought in or to be paid off as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.



Answer:

Revaluation Account

Dr.

Cr.

Particulars

Amount
 
 `

Particulars

Amount
 
 `

Machinery

45,000

Land and Building              

70,000

Profit transferred to:

 

 

 

  Shikhar’s Capital A/c

17,500

 

 

 

  Rohit’s Capital A/c

7,500

25,000

 

 

 

 

 

 

 

70,000

 

70,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

Shikhar

Rohit

Kavi

Particulars

Shikhar

Rohit

Kavi

 

 

 

 

Balance b/d

8,00,000

3,50,000

 

Balance c/d          

9,40,000

4,10,000

4,30,000

General Reserve

70,000

30,000

 

 

 

 

 

Workmen’s Compensation
Fund

35,000

15,000

 

 

 

 

 

Cash A/c

 

 

4,30,000

 

 

 

 

Premium for Goodwill

17,500

7,500

 

 

 

 

 

Revaluation A/c (Profit)

17,500

7,500

 

 

 

 

 

 

 

 

 

 

9,40,000

4,10,000

4,30,000

 

9,40,000

4,10,000

4,30,000

Cash A/c

37,000

23,000

 

Balance b/d

9,40,000

4,10,000

4,30,000

Balance c/d

9,03,000

3,87,000

4,30,000

 

 

 

 

 

9,40,000

4,10,000

4,30,000

 

9,40,000

4,10,000

4,30,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2013 after Kavi’s admission

Liabilities

Amount

   `

Assets

Amount

   `

Liability for Workmen’s              
Compensation 

50,000

Land and Building

4,20,000

Creditors

1,50,000

Machinery

4,50,000

 

Capitals:

 

  Less: Depreciation @10%

45,000

4,05,000

  Shikhar

9,03,000

 

Debtors

2,20,000

 

  Rohit

3,87,000

 

  Less: Provision

20,000

2,00,000

  Kavi

4,30,000

17,20,000

Stock

3,50,000

 

 

Cash

5,45,000

 

19,20,000

 

19,20,000

 

 

 

 


Calculation of Profit Sharing Ratio:

 

A

B

OLD RATION

3  :

1

 

 

 

Kavi’s share=1/4

 

Let total capital =1

Remaining  share of the firm=1-1/4=3/4

Shikhar’s new share= 7/10×3/4=21/40

Rohit’s new share=3/10× 3/4=9/40

New profit sharing ratio

=21/40:9/40:1/4

=21:9:10

Sacrificing Ratio =Old ratio- new ratio

Shikhar  = 7/10-21/40=7/40

Rohit =3/10- 9/40=3/40

Sacrificing Ratio =7:3


WN1: Distribution of Goodwill brought in by Kavi:

Shikhar will get =25,000×7/10=17,500

Rohit will get =25,000×3/10=7,500


WN2: Distribution of Workmen’s Compensation Fund

Shikhar will get =50,000×7/10=35,000

Rohit will get =50,000×3/10=15,000


WN3: Distribution of General Reserve:

Shikhar will get =1,00,000×7/10=70,000

Rohit will get =1,00,000×3/10=30,000

WN4: Adjustment of Capital:

Total capital of the firm= capital brough by new partner × reciprocal of share

capital brough by kavi =4,30,000

Total capital of the firm= 4,3000 × 4/1=17,40,000

 

Shikhar’s new of capital=17,40,000×21/40=9,03,000

Rohit’s new of capital =17,40,000×9/40=3,87,000



Page No 5.104:

Question 83:

The Balance Sheet of X, Y and Z who share profits and losses in the ratio of 3 : 2 : 1, as on 1st April, 2019 is as follows:                      

 

Liabilities

   `

Assets

   `

Capital A/cs:

 

 

Y's Current Account

7,000

  X

 1,75,000

 

Land and Building

1,75,000

  Y

1,50,000

 

Plant and Machinery

67,500

  Z

1,25,000

4,50,000

Furniture

80,000

Current A/cs:

 

 

Investments

36,500

X

4,000

 

Bills Receivable

17,000

Z

6,000

10,000

Sundry Debtors

43,500

 

 

 

 

General Reserve

15,000

Stock

1,37,000

Profit and Loss A/c

7,000

Bank

43,500

Creditors

80,000

 

 

Bills Payable

45,000

 

 

 

 

 

 

 

6,07,000

 

6,07,000

 

 

 

 


On the above date, W is admitted as a partner on the following terms:

(a) W will bring    ` 50,000 as his capital and get 1/6th share in the profits.
(b) He will bring necessary amount for his share of goodwill premium. Goodwill of the firm is valued at 
` 90,000.
(c) New profit-sharing ratio will be 2 : 2 : 1 : 1.
(d) A liability of  
 ` 7,004 will be created against bills receivable discounted earlier but now dishonored.
(e) The value of stock, furniture and investments is reduced by 20%, whereas the value of Land and Building and Plant and Machinery will be appreciated by 20% and 10% respectively.
(f) Capital Accounts of the partners will be adjusted on the basis of W's Capital through their Current Accounts.
Prepare Revaluation Account, Partners' Current Accounts and Capital Accounts.



Answer:

 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

 `

Particulars

Amount

 `

Stock

27,400

Land and Building

35,000

Furniture

16,000

Plant and Machinery

6,750

Investments

7,300

Loss transferred to:

 

 

 

X

4,475

 

 

 

Y

2,983

 

 

 

Z

1,492

8,950

 

50,700

 

50,700

 

 

 

 

 

Partners’ Current Account

Dr.

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Balance b/d

 

7,000

 

Balance b/d

4,000

 

6,000

Revaluation (Loss)

4,475

2,983

1,492

General Reserve

7,500

5,000

2,500

 

 

 

 

Profit and Loss A/c

3,500

2,333

1,167

Balance c/d

100,525

47,350

83,175

Premium for Goodwill

15,000

 

 

 

 

 

 

Capital A/c

75,000

50,000

75,000

 

1,05,000

57,333

84,667

 

1,05,000

57,333

84,667

 

 

 

 

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

X

Y

Z

W

Particulars

X

Y

Z

W

Current A/c

75,000

50,000

75,000

 

Balance b/d

1,75,000

1,50,000

1,25,000

 

 

 

 

 

 

Cash A/c

 

 

 

50,000

Balance c/d

1,00,000

1,00,000

50,000

50,000

 

 

 

 

 

 

1,75,000

1,50,000

1,25,000

50,000

 

1,75,000

1,50,000

1,25,000

50,000

 

 

 

 

 

 

 

 

 

 

 

Working Notes:

WN1Calculation of Sacrificing Ratio

Old Ratio=3 : 2 : 1

New Ratio=2 : 2 : 1 : 1

Sacrificing Ratio=Old Ratio-New Ratio

X=3/6-2/6=1/6

Y=2/6-2/6=Nil

Z=1/6-1/6=Nil

Here, only X has sacrificed.
 

WN2 Distribution of Goodwill

W's Share of Goodwill=90,000×16=   ` 15,000

As only X has sacrificed his share, therefore, he will get    ` 15,000
 

WN3 Adjustment of Capital

Total Capital of the firm=W's Capital×Reciprocal of his share        

=50,000×6/1=   ` 3,00,000

New Profit Sharing Ratio=2 : 2 : 1 : 1

X's New Capital=3,00,000×2/6=   ` 1,00,000

Y's New Capital=3,00,000×2/6=   ` 1,00,000

Z's New Capital=3,00,000×1/6=   ` 50,000

W's New Capital=3,00,000×1/6=   ` 50,000



Page No 5.104:

Question 84:

Raghu and Rishu are partners sharing profits in the ratio 3 : 2. Their Balance Sheet as at 31st March, 2009 was as follows: 

BALANCE SHEET OF RAGHU AND RISHU
as at 31st March, 2009

Liabilities

   `

Assets

   `

Creditors

86,000

Cash in Hand

77,000

Employees' Provident Fund

10,000

Debtors

42,000

 

Investments Fluctuation Reserve

4,000

Less: Provision for Doubtful Debts

7,000

35,000

Capital A/cs:

 

Investments

 

21,000

Raghu

1,19,000

 

Buildings

98,000

Rishu

1,12,000

2,31,000

Plant and Machinery

1,00,000

 

 

 

 

 

 

3,31,000

 

3,31,000

 

 

 

 


Rishabh was admitted on that date for 1/4th share of profit on the following terms:
(a) Rishabh will bring  
 ` 50,000 as his share of capital.
(b) Goodwill of the firm is valued at  
 ` 42,000 and Rishabh will bring his share of goodwill in cash.
(c) Buildings were appreciated by 20%.
(d) All Debtors were good.
(e) There was a liability of  
 ` 10,800 included in Creditors which was not likely to arise.
(f) New profit-sharing ratio will be 2 : 1 : 1.
(g) Capital of Raghu and Rishu will be adjusted on the basis of Rishabh's share of capital and any excess or deficiency will be made by withdrawing or bringing in cash by the concerned partners as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.



Answer:

Revaluation Account

 

Dr.

 

 

Cr.

 

Particulars

Amount

   `

Particulars

Amount

   `

 

Profit on Revaluation transferred to-

 

Building

19,600

 

  Raghu’s Capital A/c

22,440

 

Provision for Doubtful Debts (Old)

7,000

 

  Rishu’s Capital A/c

14,960

37,400

Liability for Creditors

10,800

 

 

37,400

 

37,400

 

 

 

 

 

 

           
Partners’ Capital Account

Dr.

 

 

 

 

 

 

Cr.

Particulars

Raghu

Rishu

Rishabh

Particulars

Raghu

Rishu

Rishabh

 

 

 

 

Balance b/d

1,19,000

1,12,000

 

Cash A/c (Bal. Fig.)

48,040

84,860

 

Cash A/c

 

 

50,000

Balance c/d

1,00,000

50,000

50,000

Investment Fluctuation
Fund

2,400

1,600

 

 

 

 

 

Premium for Goodwill

4,200

6,300

 

 

 

 

 

Revaluation A/c (Profit)

22,440

14,960

 

 

 

 

 

 

 

 

 

 

1,48,040

1,34,860

50,000

 

1,48,040

1,34,860

50,000

 

 

 

 

 

 

 

 

                       

Balance Sheet

as on March 31, 2009

Liabilities

Amount

   `

Assets

Amount

   `

Creditors

86,000

 

Cash (WN4)

4,600

  Less: Liability

(10,800)

75,200

Debtors

42,000

Employees Provident Fund   

10,000

Investments

21,000

Capital A/cs:

 

Buildings (98,000 + 19,600)

1,17,600

Raghu

1,00,000

 

Plant and Machinery

1,00,000

Rishu

50,000

 

 

 

Rishabh

50,000

2,00,000

 

 

 

 

 

 

 

2,85,200

 

2,85,200

 

 

 

 

 

Working Notes:


WN 1Calculation of Sacrificing Ratio

Old Ratio = 3 : 2

New Ratio = 2 : 1 : 1

Sacrificing Ratio = Old ratio – New Ratio

Raghu = 3/5-2/4=10-12/20=2/20

Rishu  =2/5-1/4=8-5/20=3/20

Sacrificing Ratio =2:3

WN 2Share of Rishabh’s Share of Goodwill

Value of Firm’s Goodwill = 42,000

Rishabh‘s share of goodwill=42,000×1/4=10,500


WN 3Adjustment of Capital

Total Capital of New Firm =  Rishabh’s Capital × Reciprocal of Rishabh’s Share

Capital of Rishabh =    ` 50,000

 

Total capital of the firm= capital brough by new partner × reciprocal of share

Total capital of the firm= 50,000 × 4/1=2,00,000

 

Raghu‘s new capital= 2,00,000× 2/4=1,00,000

Rishu‘s new capital= 2,00,000× 1/4 =50,000

 


WN 4 Cash Account

Cash Account

Dr.

 

 

Cr.

Particulars

Amount

   `

Particulars

Amount

   `

Balance b/d

77,000

Raghu’s Capital         

48,040

Rishabh’s Capital

50,000

Rishu’s Capital

84,860

Premium for Goodwill   

10,500

Balance c/d

4,600

 

1,37,500

 

1,37,500

 

 

 

 



Page No 5.105:

Question 85:



Answer:

Revaluation Account

 

Dr.

 

 

Cr.

 

Particulars

Amount

   `

Particulars

Amount

   `

 

To Stock

To Provision for D.D.

To Furniture

To Profit transferred to

3,000

400 

2,000

By Building

20,000

 

A=14,600×3/5=

8,760

 

 

B=14,600×2/5=

5,840

14,600

 

 

20,000

 

20,000

 

 

 

 

 

 

           
Partners’ Capital Account

 

Dr.

 

 

 

 

 

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 Balance c/d

1,32,260

73,340

64,000

Balance b/d

1,04,000

52,000

Cash A/c

64,000

 

Premium for Goodwill

7,500

7,500

 

Revaluation A/c (Profit)

8,760

5,840

 

Workers’ compensation reserve

Contingency reserve

6000

6000

4000

4000

 

1,32,260

73,340

64,000

1,32,260

73,340

64,000

  Balance c/d

 1,60,000

96,000 

64,000 

 Balance b/d

Cash A/c

1,32,260

27,740

73,340

22,660

64,000

 1,60,000

96,000 

64,000 

 1,60,000

96,000 

64,000 

Balance Sheet

as on March 31, 2009

 

Liabilities

Amount

   `

Assets

Amount

   `

 

Creditors

1,54,000 

Cash (8,000+64,000+15,000+50,000)

1,87,400

 

Debtors                       37,600

Less; Prov. For D.D.     2,000

 

35,000

 

Employees Provident Fund   

16,000

Stock

Prepaid Insurance

Plant and Machinery

Building

57,000

6,000

76,000

1,60,000

 

Capital A/cs:

 

Furniture

18,000

 

Raghu

1,60,000

 

 

Rishu

96,000

 

 

 

 

Rishabh

64,000

3,20,000

 

 

 

 

 

 

 

 

 

4,90,000

 

4,90,000

 

 

 

 

 

 

 

Working notes;

 

WN-1 Calculation of old and sacrificing ratio;

Old ratio of A and B =3:2

New ratio of A:B:C =5:3:2

A=3/5-5/10=6-5/10=1/10

B=2/5-3/10=4-3/10=1/10

Sacrificing ratio of A and B is 1:1

 

WN-2 Calculation of new firm’s capital;

Total capital of new firm on the basis of C’s Capital

C’s capital =64,000

New firm’s total capital=64,000×10/2=`3,20,000

New capital of A,B and C

A= 3,20,000×5/10 = `1,60,000

B= 3,20,000×3/10 =`96,000

C= 3,20,000×2/10 = `64,000

 


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Chapter-5: Admission Of A Partner 2020

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