Volume-1 | Chapter-5 | Question: 86 to 90 | Admission Of A Partner | Ts grewal solution 2020-21 | Class-12th

Page No 5.105:

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)×43×14=   ` 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)×12=   ` 27,000

Binay's New Capital=(39,500+14,500)×12=   ` 27,000

WN3 Calculation of Chitra's Share of Goodwill

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

 =20,000×14=   ` 5,000

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



Page No 5.106:

Question 87:



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 5.106:

Question 88:

A, B and C are partners sharing profits and losses in the ratio of 2 : 3 : 5. On 31st March, 2019, their Balance Sheet was: 

 

Liabilities

Amount
 `

Assets

Amount
 `

Creditors

64,000

Cash

18,000

Bills Payable

22,000

Bills Receivable

14,000

General Reserve

14,000

Stock

44,000

Capital A/cs:

 

Debtors

42,000

A

36,000

 

Machinery

94,000

B

44,000

 

Goodwill

20,000

C

52,000

1,32,000

 

 

 

2,32,000

 

2,32,000

 

 

 

 


They admit D into partnership on the following terms:
(a) Machinery is to be depreciated by 15%.
(b) Stock is to be revalued at  
 ` 48,000.
(c) It is found that the Creditors included a sum of  
 ` 12,000 which was not to be paid.
(d) Outstanding Rent is  
 ` 1,900.
(e) D is to bring in  
 ` 6,000 as goodwill and sufficient capital for 2/5th share.
(f) The partners decided to use 10% of the profits every year in providing drinking water in schools, where required.
Prepare Revaluation Account, Partners' Capital Accounts, Cash Account and Balance Sheet of the new firm.



Answer:

 

In the books of A, B, C and D

 

Dr.

Revaluation A/c

Cr.

Particulars

Amount

 `

Particulars

Amount

 `

To Machinery A/c

14,100

By Stock A/c

4,000

To Outstanding Rent A/c

1,900

By Creditors A/c             

12,000

 

 

 

 

 

16,000

 

16,000

 

 

 

 

 

Dr.

Partner’s Capital A/c

Cr.

Particulars

A

 `

B

 `

C

 `

D

 `

Particulars

A

 `

B

 `

C

 `

D

 `

To Goodwill A/c

4,000

6,000

10,000

 

By balance b/d

36,000

44,000

52,000

 

 

 

 

 

 

By Bank A/c (WN2)

 

 

 

88,000

To balance c/d

36,000

44,000

52,000

88,000

By Premium for Goodwill A/c

1,200

1,800

3,000

 

 

 

 

 

 

By General Reserve A/c

2,800

4,200

7,000

 

 

 

 

 

 

 

 

 

 

 

 

40,000

50,000

62,000

88,000

 

40,000

50,000

62,000

88,000

 

 

 

 

 

 

 

 

 

 

  Working Notes:

1. Calculation of New profit-sharing ratio
 

D’s Share of Profits

=

2/5

Remaining Profits

=

(1 –2/5) = 3/5

A’s New Share of Profits

=

(3/5 × 2/10) = 6/50

B’s New Share of Profits

=

(3/5 × 3/10) = 9/50

C’s New Share of Profits

=

(3/5 × 5/10) = 15/50

A : B : C : D

=

6 : 9 : 15 : 20


2. Calculation of D’s Capital
Total Adjusted Capital of the Old Partners = A’s Capital + B’s Capital + C’s Capital =  
 ` (36,000 + 44,000 + 52,000) =    ` 1,32,000 Combined New Share of the Old Partners = (6/50 + 9/50 + 15/50) = 30/50 or 3/5
 

Total Capital of the new firm

=

(Adjusted Capital of the Old Partners × Reciprocal of Combined New Share of the Old Partners)

 

=

   ` (1,32,000 × 5/3) =    ` 2,20,000

D’s Capital

=

(Total Capital of the new firm × His Share of Profits)

 

=

   ` (2,20,000 × 2/5) =    ` 88,000

 

Balance Sheet

as at 31st March, 2020

Liabilities

Amount

 `

Assets

Amount

 `

Capitals A/cs:

 

Cash (18,000 + 88,000 + 6,000)

1,12,000

  A

36,000

 

Bills Receivable

14,000

  B

44,000

 

Stock

48,000

  C

52,000

 

Debtors

42,000

  D

88,000

2,20,000

Machinery

94,000

 

Creditors

52,000

  Less: Depreciation

14,100

79,900

Bills Payable

22,000

 

 

Outstanding Rent                      

1,900

 

 

 

 

 

 

 

2,95,900

 

2,95,900

 

 

 

 

 



Page No 5.107:

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.



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 5.107:

Question 90:

  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

50,000

 

Capital's A/cs:

 

 

Less : Provision for Doubtful Debts

2,000

48,000

A

54,000

 

 

 

 

B

35,000

89,000

Investments  

7,000

 

 

Goodwill

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.
(c) Market value of investment is  
 ` 4,500.
(d) Liability on account of Workmen Compensation Reserve amounted to  
 ` 2,000.
Prepare Revaluation Account and Partners' Capital Accounts.



Answer:

Revaluation Account

 

Dr.

Cr.

 

Particulars

Amount

 `

Particulars

Amount

 `

 

Bad debts

1,000

 

 

 

 

 

Loss on Revaluation

 

 

 

 

A's Capital A/c

750

 

 

 

 

B’s Capital A/c

250

1,000

 

 

 

 

 

 

 

1,000

 

1,000

 

 

 

 

 

 


Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

Revaluation

750

250

 

Balance b/d

54,000

35,000

 

Goodwill

30,000

10,000

 

Bank

 

 

23,200

 

 

 

 

Premium for Goodwill

12,000

4,000

 

 

 

 

 

WCF

3,000

1,000

 

Balance c/d

39,450

30,150

23,200

IFF

1,200

400

 

 

70,200

40,400

23,200

 

70,200

40,400

23,200

 

 

 

 

 

 

 

 


Working Notes:

WN1 Calculation of C's Capital

C's Capital=Total Adjusted Capital of A and B×Reciprocal of Combined Profit Share×C's Profit ShareA's Adjusted Capital

=54,000+12,000+3,000+1,200-750-30,000=   ` 39,450

B's Adjusted Capital=35,000+4,000+1,000+400-250-10,000=   ` 30,150

C's Capital=(39,450+30,150)×43×14=   ` 23,200
Notes:
1. Premium for Goodwill   
 ` 16,000 will be distributed between A and B in sacrificing ratio i.e. 3 : 1.
2. Excess WCF of  
 ` 4,000 will be shared in old ratio among old partners.
3. Excess IFF of  
 ` 1,600 will be shared in old ratio among old partners.


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Chapter-5: Admission Of A Partner 2020

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