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12th | Admission Of A Partner | Question No. 66 To 70 | Ts Grewal Solution 2023-2024

Double Entry Book Keeping Ts Grewal Vol. 1 2019 Solutions for Class 12 Commerce ACCOUNTANCY Chapter 5 - Admission Of A Partner

Question 66:


  Sushil and Satish are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2023 was as follows:

 

Liabilities

`

Assets

       `

Outstanding Rent

13,000

Cash

10,000

Creditors

20,000

Sundry Debtors

80,000

 

Workmen Compensation Reserve

         

5,600

 Less : Provision for Doubtful Debts

4,000

76,000

Capital A/cs: Sushil

50,000

 

Stock

20,000

                   Satish

60,000

1,10,000

Profit and Loss A/c  

4,000

 

 

Machinery

38,600

 

 

 

 

 

 

 

 

 

1,48,600

 

1,48,600

 

 

 

 


On 1st April, 2023, they admitted Samir as a partner for 1/6th share on the following terms:
(i) Samir brings in  
 ` 40,000 as his share of Capital but he is unable to bring any amount for Goodwill.
(ii) Claim on account of Workmen Compensation is  
 ` 3,000.
(iii) To write off Bad Debts amounted to  
 ` 6,000.
(iv) Creditors are to be paid  
 ` 2,000 more.
(v) There being a claim against the firm for damages, liabilities to the extent of  
 ` 2,000 should be created.
(vi) Outstanding rent be brought down to  
 ` 11,200.
(vii) Goodwill is valued at 112 years' purchase of the average profits of last 3 years, less  
 ` 12,000. Profits for the last 3 years amounted to    ` 10,000;    ` 20,000 and    ` 30,000.
  Pass Journal entries, prepare Partners' Capital Accounts and opening Balance Sheet.

Answer:


Journal

Date
 

Particulars

L.F.

Debit

`

Credit

`

2023

 

 

 

 

 

April 1

Revaluation A/c

Dr.

 

2,000

 

 

   To Provision for Doubtful Debts A/c

 

 

 

2,000

 

(Provision on debtors increased)

 

 

 

 

 

 

 

 

 

 

April 1

Revaluation A/c

Dr.

 

2,000

 

 

   To Creditors A/c

 

 

 

2,000

 

(Creditors  increased)

 

 

 

 

 

 

 

 

 

 

April 1

Revaluation A/c

Dr.

 

2,000

 

 

   To Claim for Damages A/c

 

 

 

2,000

 

(Liability increased)

 

 

 

 

 

 

 

 

 

 

April 1

Outstanding Rent A/c

Dr.

 

1,800

 

 

    To Revaluation A/c

 

 

 

1,800

 

(Liability decreased)

 

 

 

 

 

 

 

 

 

 

April 1

Sushil’s Capital A/c

Dr

 

2,520

 

 

Satish’s Capital A/c

Dr

 

1,680

 

 

     To Revaluation A/c

 

 

 

4,200

 

(Loss on revaluation transferred to Partners’ Capital A/c)

 

 

 

 

 

 

 

 

 

 

April 1

Workmen Compensation Reserve A/c

Dr.

 

5,600

 

 

      To Workmen Compensation Claim A/c

 

 

 

3,000

 

      To Sushil’s Capital A/c

 

 

 

1,560

 

      To Satish’s Capital A/c

 

 

 

1,040

 

(Surplus Workmen Compensation Reserve distributed)

 

 

 

 

 

 

 

 

 

 

April 1

Bank A/c

Dr

 

40,000

 

 

   To Samir’s Capital A/c

 

 

 

40,000

 

(Capital  brought in cash)

 

 

 

 

 

 

 

 

 

 

April 1

Samir’s Current A/c

Dr.

 

3,000

 

 

      To Sushil’s Capital A/c

 

 

 

1,800

 

      To Satish’s Capital A/c

 

 

 

1,200

 

(Goodwill adjusted in the ratio 3:2 )

 

 

 

 

 

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

Sushil

Satish

Samir

Particulars

Sushil

Satish

Samir

 

 

 

 

 

 

 

 

Profit & Loss A/c

2,400

1,600

 

Balance b/d

50,000

60,000

 

Revaluation A/c

2,520

1,680

 

Bank A/c

 

 

40,000

Balance c/d

48,440

58,960

40,000

Workmen Compensation Reserve

1,560

1,040

 

 

 

 

 

Z's Current A/c

1,800

1,200

 

 

 

 

 

 

 

 

 

 

53,360

62,240

40,000

 

53,360

62,240

40,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance sheet 

as on 1st April, 2023 after Z’s admission

Liabilities

`

Assets

`

Outstanding Rent

   11,200

Cash

50,000

Workmen Compensation Claim

3,000

Stock

20,000

Creditors

22,000

Machinery

38,600

Claim for Damages

2,000

Samir‘s Current A/c

3,000

Capital

 

Debtors

80,000

 

Sushil

48,440

 

 Less : Provision for D.D.

6,000

74,000

Satish

58,960

 

 

 

 

Samir

40,000

1,47,400

 

 

 

 

 

 

 

 

1,85,600

 

1,85,600

 

 

 

 

 

Working Notes:

WN1: Calculation of Goodwill

Average Profit =10,000+20,000+30,000/3=60,000/3=   ` 20,000

Goodwill = Average Profits × Number of years' purchase                

= (20,000×1.5) - 12,000 = 30,000 - 12,000 =    ` 18,000

WN
2: Calculation of Z’s share of goodwill
Samir's share of goodwill = 18,000×1/6=   ` 3,000

 

Question 67:


Rajesh and Ravi are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet at 31st March, 2023 stood as:

BALANCE SHEET as at 31st March, 2023

Liabilities

   `

Assets

   `

Creditors

38,500

Cash

2,000

Outstanding Rent

4,000

Stock

15,000

Capital A/cs:

 

Prepaid Insurance

1,500

Rajesh

29,000

 

Debtors

9,400

 

Ravi

         15,000

 

 Less : Provision for Doubtful Debts

400

9,000

 

 

Machinery

19,000

 

 

Building

35,000

 

 

Furniture

5,000

 

86,500

 

86,500

 

 

 

 


Raman is admitted as a new partner introducing a capital of  
 ` 16,000. The new profit-sharing ratio is decided as 5 : 3 : 2. Raman is unable to bring in any cash for goodwill. So, it is decided to value the goodwill on the basis of Raman's share in the profits and the capital contributed by him. Following revaluations are made:
(a) Stock to decrease by 5%;
(b) Provision for Doubtful Debts is to be  
 ` 500;
(c) Furniture to decrease by 10%;
(d) Building is valued at  
 ` 40,000.
Show necessary Ledger Accounts and Balance Sheet of new firm.

Answer:


Revaluation Account

Dr.

 

Cr.

Particulars

`

Particulars

`

Stock

750

Building

5,000

Provision for D. Debts

500

 

 

 

Less: Old Provision

400

100

 

 

Furniture

500

 

 

 

 

 

 

Profit on Revaluation transferred to

 

 

 

Rajesh Capital

2,190

 

 

Ravi Capital

1,460

 

 

 

5,000

 

5,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

Rajesh

Ravi

Raman

Particulars

Rajesh

Ravi

Raman

 

 

 

 

Balance b/d

29,000

15,000

 

 

 

 

 

Revaluation

2,190

1,460

 

Balance c/d

31,190

16,460

16,000

Cash

 

 

16,000

(before and just went of

 

 

 

 

 

 

 

Goodwill)

 

 

 

 

 

 

 

 

31,190

16,460

16,000

 

31,190

16,460

16,000

Rajesh’s Capital

 

 

1,635

Balance c/d

31,190

16,460

16,000

Raman’s Capital

 

 

1,635

Raman’s Capital

1,635

1,635

 

Balance c/d

32,825

18,095

12,730

 

 

 

 

 

32,825

18,095

16,000

 

32,825

18,095

16,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2023 after Raman’s admission

Liabilities

`

Assets

`

Creditors

38,500

Cash (2,000 + 16,000)

18,000

Outstanding Rent

4,000

Stock (15,000 – 750)

14,250

Capital A/cs:

 

Prepaid Insurance

1,500

Rajesh

32,825

 

Debtors

9,400

 

Ravi

18,095

 

Less: Provision for D. Debts

500

8,900

Raman

12,730

63,730

Machinery

19,000

 

 

Building (35,000 + 5,000)

40,000

 

 

Furniture (5,000 – 500)

4,500

 

1,06,150

 

1,06,150

 

 

 

 


Working Notes-

WN1 Calculation of Sacrificing Ratio

 

Rajesh

Ravi

Raman

OLD RATION

3  :

2 

 

NEW RATIO

5  : 

3  :

2


Sacrificing Ratio = Old Ratio − New Ratio

 

Rajesh’s

=3/5-5/10

 

 

 

=1/10

 

 

Ravi’s

=2/5-3/10

 

 

 

=1/10

 

 

Rajesh

 

Ravi

Sacrificing ratio=

1/10      

:

1/10

=

1      

:

1



WN2 Calculation of Goodwill
Actual Capital of all Partners before adjustment of goodwill = Rajesh’s Capital + Ravi’s Capital + Raman’s Capital
= 31,190 + 16,460 + 16,000
=  
 ` 63,650
Capitalised value on the basis of Raman’s share =16,000×10/2=80,000
Goodwill of thefirm= Capitalised value of the firm-Actual capital of the firm (before adjument of the goodwill)

=80,000-63,650

=16,350
Raman’s share of Goodwill =16,350×2/10=3,270

WN3 Adjustment of Raman’s share of goodwill
Rajesh and Ravi each Capital Accounts will be credited by =3,270×1/2=1,635

Journal

Particulars

L.F.

Debit

`

Credit

`

Raman’s Capital A/c

Dr.

 

3,270

 

To Rajesh’s Capital A/c

 

 

1,635

To Ravi’s Capital A/c

 

 

1,635

(Raman’s share of goodwill adjusted)

 

 

 

 

 

 

 


WN4 Distribution of Profit on Revaluation (in old ratio)
Rajesh  will get =3,650×3/5=2190

Ravi will get =3,650×2/5=1460

 

Question 68:


 On 31st March, 2019, the Balance Sheet of A and B, who were sharing profits in the ratio of 3 : 2 was as follows:

Liabilities

`

Assets

`

 

Creditors

Investment Fluctuation Fund

General Reserve

Capitals A/cs:

30,000

12,000

25,000

Cash at Bank

20,000

 

Debtors

Less: Provision for Bad Debts

85,000

5,000

 

80,000

 

Stock

Investments

Furniture

1,30,000

60,000

77,000

A

B

1,60,000

1,40,000

 

3,00,000

 

 

3,67,000

 

3,67,000

 

 

On 1st April, 2019, they decided to admit C as a new partner for 1/5th share in the profits on the following terms:

(i) C brought `1,00,000 as his capital and `50,000 as his share of premium for goodwill.

(ii) Outstanding salaries of `2,000 be provided for.

(iii) The market value of investments was `50,000.

(iv) A debtor whose dues of `18,000 were written off as bad debts paid `12,000 in full settlement.

Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm. (CBSE 2020)

Answer:


Revaluation A/c

Particulars

`

Particulars

`

To Outstanding salary

To Gain transferred to: (WN1)

2,000

 

 

10,000

By Bad debts Recovered A/c

12,000

A’s Capital A/c

B’s Capital A/c

6,000

4,000

 

12,000

 

12,000

 

Capital A/c

Particulars

A

B

C

Particulars

A

B

C

To Balance c/d

2,12,200

1,74,800

1,00,000

By Balance b/d

By revaluation A/c

By Investment Fluctuation Fund (WN2)

By General Reserve A/c(WN3)

By Bank A/c

By Premium A/c (WN4)

1,60,000

6,000

1,200

15,000

-

30,000

140,000

4,000

800

10,000

-

20,000

-

-

-

-

1,00,000

-

 

2,12,200

1,74,800

1,00,000

 

2,12,200

1,74,800

1,00,000

 

Balance Sheet

Particulars

`

Particulars

`

Creditors

O/s Salary

 

 

 

Capitals A/cs:

30,000

2,000

 

 

 

 

 

 

 

4,87,000

Cash (WN5)

1,82,000

Debtors

Less: Pro. D. D.

85,000

5,000

 

80,000

 

Stock

Investment

Furniture

 

1,30,000

50,000

77,000

A

B

C

2,12,200

1,74,800

1,00,000

 

 

 

5,19,000

 

5,19,000

 

 

Working Notes;

WN1 Distribution of Revaluation Gain in 3:2

A=10,000×3/5=6,000

B=10,000×2/5=4,000

 

WN2 Investment fluctuation Reserve in 3:2

A = 2,000×3/5 = 1,200

B = 2,000×2/5 = 800

 

WN3 General Reserve in 3:2

A = 25,000×3/5 = 15,000

B = 25,000×2/5 = 10,000

\

WN4 Distribution of Premium in Sacrificing Ratio 3:2

A = 50,000×3/5 = 30,000

B = 50,000×2/5 = 20,000

 

WN5 Cash balance

Cash Balance = 20,000+1,00,000+50,000+12,000

Cash Balance = 1,82,000

 

Question 69:


Divya, Yasmin and Fatima are partners in a firm, sharing profits and losses in 11 : 7 : 2 respectively. The Balance Sheet of the firm on 31st March, 2018 was as follows:

BALANCE SHEET as at 31st March, 2018

Liabilities

`

Assets

`

Sundry Creditors

70,000

Factory Building

7,35,000

Public Deposits

1,19,000

Plant and Machinery

1,80,000

Reserve Fund

90,000

Furniture

2,60,000

Outstanding Expenses

10,000

Stock

1,45,000

Capital A/cs:

 

 Debtors

1,50,000

 

Divya

5,10,000

 

 Less: Provision

(30,000)

1,20,000

Yasmin

3,00,000

 

Cash at Bank

1,59,000

Fatima

5,00,000

13,10,000

 

 

 

15,99,000

 

15,99,000

 

 

 

 


On 1st April, 2018, Aditya is admitted as a partner for one-fifth share in the profits with a capital of  
 ` 4,50,000 and necessary amount for his share of goodwill on the following terms:
(a) Furniture of  
 ` 2,40,000 were to be taken over Divya, Yasmin and Fatima equally.
(b) A creditor of  
 ` 7,000 not recorded in books to be taken into account.
(c) Goodwill of the firm is to be valued at 2.5 years' purchase of average profits of last two years. The profit of the last three years were:
2015-16 −  
 ` 6,00,000; 2016-17 −    ` 2,00,000; 2017-18 −    ` 6,00,000.
(d) At time of Aditya's admission. Yasmin also brought in  
 ` 50,000 as fresh capital.
(e) Plant and Machinery is re-valued to  
 ` 2,00,000 and expenses outstanding were brought down to    ` 9,000.
Prepare Revaluation Account, Partners Capital Account and the Balance Sheet of the reconstituted firm.

Answer:


In the books of Divya, Yasmin, Fatima and Aditya

Dr.

Revaluation A/c

Cr.

Particulars

`

Particulars

`

To Sundry Creditors A/c

7,000

By Plant and Machinery A/c

20,000

To Profit Transferred to:

 

By Outstanding Expenses A/c

1,000

Divya’s Capital A/c

7,700

 

 

 

  Yasmin’s Capital A/c

4,900

 

 

 

  Fatima’s Capital A/c

1,400

14,000

 

 

 

 

 

 

 

21,000

 

21,000

 

 

 

 

 

Dr.

Partner’s Capital A/c

Cr.

Particulars

Divya

 `

Yasmin

 `

Fatima

 `

Aditya

 `

Particulars

Divya

 `

Yasmin

 `

Fatima

 `

Aditya

 `

To Furniture A/c     

80,000

80,000

80,000

 

By balance b/d

5,10,000

3,00,000

5,00,000

 

 

 

 

 

 

By Bank A/c

 

50,000

 

4,50,000

To balance c/d

5,97,200

3,76,400

4,50,400

4,50,000

By Premium

1,10,000

70,000

20,000

 

 

 

 

 

 

for Goodwill A/c

 

 

 

 

 

 

 

 

 

By Reserve Fund A/c

49,500

31,500

9,000

 

 

 

 

 

 

By Revaluation A/c

7,700

4,900

1,400

 

 

 

 

 

 

 

 

 

 

 

 

6,77,200

4,56,400

5,30,400

4,50,000

 

6,77,200

4,56,400

5,30,400

4,50,000

 

 

 

 

 

 

 

 

 

 

 
Working Notes:

Calculation of Goodwill brought in by Aditya
 

Average Profits

=

(Normal profits from 31st March, 2017 to 31st March, 2018)/2

 

=

   ` (2,00,000 + 6,00,000)/2=    ` 4,00,000

Goodwill

=

Average Profits × No. of years of Purchase

 

=

   ` (4,00,000 × 2.5) =    ` 10,00,000

Goodwill brought in by Aditya

=

   ` (10,00,000 × 1/5) =    ` 2,00,000

           

Balance Sheet

as at 31st March, 2018

Liabilities

`

Assets

`

Capitals:

 

Factory Building

7,35,000

  Divya

5,97,200

 

Plant and Machinery

2,00,000

  Yasmin

3,76,400

 

Furniture

20,000

  Fatima

4,50,400

 

Stock

1,45,000

  Aditya

4,50,000

18,74,000

Debtors

1,50,000

 

Sundry Creditors

77,000

  Less: Provision

(30,000)

1,20,000

Public Deposits

1,19,000

Cash at Bank

8,59,000

Outstanding Expenses           

9,000

(1,59,000 + 2,00,000 + 50,000 + 4,50,000)

 

 

 

 

 

 

20,79,000

 

20,79,000

 

 

 

 

 

Question 70:


A and B are partners in a firm. The net profit of the firm is divided as follows: 1/2 to A, 1/3 to B and 1/6 carried to a Reserve. They admit C as a partner on 1st April, 2023 on which date, the Balance Sheet of the firm was:

 

Liabilities

   `

Assets

   `

Capital A/cs:

 

Building

50,000

A

50,000

 

Plant and Machinery

30,000

B

40,000

90,000

Stock

18,000

Reserve

 

10,000

Debtors

22,000

Creditors

 

20,000

Bank

5,000

Outstanding Expenses

 

5,000

 

 

 

 

 

 

 

 

 

1,25,000

 

1,25,000

 

 

 

 

 

Following are the required adjustments on admission of C:
(a) C brings in
` 25,000 towards his capital.
(b) C also brings in
` 5,000 for 1/5th share of goodwill.
(c) Stock is undervalued by 10%.
(d) Creditors include a liability of  
 ` 4,000, which has been decided by the court at    ` 3,200.
(e) In regard to the Debtors, the following Debts proved Bad or Doubtful−
 
 ` 2,000 due from X−bad to the full extent;
 
 ` 4,000 due from Y−insolvent, estate expected to pay only 50%.
You are required to prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.

Answer:


Revaluation Account

Dr.

 

 

Cr.

Particulars

`

Particulars

`

Bad Debts

2,000

Stock

2,000

Provision for Doubtful Debts

2,000

Creditors (4,000 – 3,200)

800

(4,000 × 50%)

 

 

 

 

 

Loss transferred to

 

 

 

   A Capital

720

 

 

   B Capital

480

 

4,000

 

4,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

Revaluation

720

480

 

Balance b/d

50,000

40,000

 

 

 

 

 

Reserve

6,000

4,000

 

 

 

 

 

Bank

 

 

25,000

Balance c/d

58,280

45,520

25,000

Premium for Goodwill

3,000

2,000

 

 

59,000

46,000

25,000

 

59,000

46,000

25,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2023 after C’s admission

Liabilities

`

Assets

`

Capital A/cs:

 

Building

50,000

A

58,280

 

Plan and Machinery

30,000

B

45,520

 

Stock (18,000 × 100/90)

20,000

C

25,000

1,28,800

Debtors

22,000

 

Creditors (20,000 – 800)           

19,200

Less: Bad Debts

2,000

 

Outstanding Expenses

5,000

Less: Prov. for D. Debts

2,000

18,000

 

 

Bank (5,000 + 30,000)

35,000

 

1,53,000

 

1,53,000

 

 

 

 


Working Notes

WN1
old ration ; ½:1/3=3:2

Sacrificing ratio=3:2

WN2
Distribution of Reserve
A will get =10,000×3/5=6,000

B will get =10,000×2/5=4,000



WN3
Distribution of Premium for Goodwill
A will get =5,000×3/5=3,000

B will get =5,000×2/5=2,000

 

 

Ts Grewal Solution 2023-2024

Click below for more Questions

Class 12 / Volume – I

Chapter 4 – Admission Of A Parnter

 

Question No. 1 To 5
Question No. 6 To 10
Question No. 11 To 15
Question No. 16 To 20
Question No. 21 To 25
Question No. 26 To 30
Question No. 31 To 35