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12th | Admission Of A Partner | Question No. 71 To 75 | 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 71:


Deepika and Rajshree are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2023 their Balance Sheet was:

 

Liabilities

   `

Assets

   `

Sundry Creditors

16,000

Cash in Hand

1,200

Public Deposits

61,000

Cash at Bank

2,800

Bank Overdraft

6,000

Stock

32,000

Outstanding Liabilities

2,000

Prepaid Insurance

1,000

Capital A/cs:

 

Sundry Debtors

28,800

 

Deepika

48,000

 

Less: Provision for Doubtful Debts

 800

28,000 

Rajshree

40,000

88,000

Plant and Machinery  

48,000

 

 

Land and Building

50,000

 

 

Furniture

10,000

 

 

 

 

 

1,73,000

 

1,73,000

 

 

 

 


On 1st April, 2023 the partners admit Anshu as a partner on the following terms:
(a) The new profit-sharing ratio of Deepika, Rajshree and Anshu will be 5 : 3 : 2 respectively.
(b) Anshu shall bring in  
 ` 32,000 as his capital.
(c) Anshu is unable to bring in any cash for his share of goodwill. Partners, therefore, decide to calculate the goodwill on the basis of Anshu's share in the profits and the capital contribution made by her to the firm.
(d) Plant and Machinery is to be valued at  
 ` 60,000, Stock at    ` 40,000 and the Provision for Doubtful Debts is to be maintained at    ` 4,000. Value of Land and Building has appreciated by 20%. Furniture has been depreciated by 10%.
(e) There is an additional liability of  
 ` 8,000 being outstanding salary payable to employees of the firm. This liability is not included in the outstanding liabilities, stated in the above Balance Sheet. Partners decide to show this liability in the books of account of the reconstituted firm.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of Deepika, Rajshree and Anshu.

 

Answer:


 

 

Revaluation Account

Dr.

 

Cr.

Particulars

`

Particulars

`

Reserve for D. Debts

4,000

 

Plant and Machinery

12,000

Less: Old Reserve

800

3,200

    (60,000 – 48,000)

 

 

 

 

 

Furniture          10,000 × 10%

1,000

Stock (40,000 – 32,000)

8,000

Outstanding salary

8,000

 

 

Profit transferred to  

 

Land and Building

10,000

   Deepika Capital - 10,680

 

    (50,000 × 20%)

 

   Rajshree Capital - 7,120

17,800

 

 

 

30,000

 

30,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

Deepika

Rajshree

Anshu

Particulars

Deepika

Rajshree

Anshu

Balance c/d

58,680

47,120

32,000

Balance b/d

48,000

40,000

 

(before adjustment of Goodwill)

 

 

 

 

 

 

 

 

 

 

 

Revaluation

10,680

7,120

 

 

 

 

 

Cash

 

 

32,000

 

58,680

47,120

32,000

 

58,680

47,120

32,000

 

 

 

 

 

 

 

 

 

 

 

 

Balance b/d

58,680

47,120

32,000

 

 

 

 

Anshu’s Current A/c (Goodwill)

2,220

2,220

-

Balance c/d

60,900

49,340

32,000

 

 

 

 

60,900

49,340

32,000

 

60,900

49,340

32,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2023 after Anshu’s admission

Liabilities

`

Assets

`

Outstanding Salaries

8,000

Cash in Hand

1,200

Sundry Creditors

16,000

Cash at Bank

28,800

Public Deposits

61,000

Stock

40,000

Outstanding Liabilities               

2,000

Prepaid Insurance

1,000

 

 

Anshu’s Current A/c

4,440

Capital A/cs:

 

Sundry Debtors

28,800

 

Deepika

60,900

 

Less: Prov. for D. Debts

4,000

24,800

Rajshree

49,340

 

Plant and Machinery

60,000

Anshu

32,000

1,42,240

Land and Building

60,000

 

 

Furniture

9,000

 

2,29,240

 

2,29,240

 

 

 

 


Working notes:

 

WN1: Calculation of Sacrificing Ratio

 

Deepika

Rajshree

Anshu

OLD RATION

3        :

      2    :

0

NEW RATIO

5        :

     3     :

2


Sacrificing Ratio = Old Ratio − New Ratio
Deepika = 3/5-5/10=1/10

Rajshree =2/5-3/10=1/10

 

Deepika

Rajshree

Sacrificing Ratio =

1     :

1



WN2: Valuation of Goodwill


Capitalised value on the basis of Anshu’s share=32,000×10/2=1,60,000
Actual Capital of all partners before adjustment of Goodwill = 58,680 + 47,120 + 32,000= 
` 1,37,800
Goodwill = Capitalised value − Actual Capital of all partners before adjustment of Goodwill
= 1,60,000 − 1,37,800
=  
 ` 22,200
Anshu’s share of Goodwill =22,200×2/10=4,440
Deepika and Rajshree each will entitle for Goodwill share to be compensated = 4,440×1/2=2,220

 

Entry

Particulars

 

`

`

Anshu’s Current A/c

Dr.

4,440

 

 To Deepika’s Capital A/c

 

 

2,220

 To Rajshree’s Capital A/c

 

 

2,220

(Being old partners compensated)

 

 

 

 

 

 

 

 

 

Question 72:


Atul and Amit are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2023 is as follows:

Liabilities

`

Assets

`

Capital A/cs:

 

Plant and Machinery

1,80,000

Atul

1,00,000

 

Furniture

30,000

Amit

1,00,000

2,00,000

Computer

10,000

Current A/cs:

 

 

Stock

40,000

Atul

70,000

 

Debtors

50,000

Amit

50,000

1,20,000

Bills Receivable

10,000

Creditors

 

40,000

Cash

10,000

Bills Payable

 

10,000

Bank

40,000

 

3,70,000

 

3,70,000

 

 

 

 


  Abhay is admitted as a partner for 1/4th share on 1st April, 2023 on the following terms:
(a) Abhay is to bring  
 ` 65,000 as capital after adjusting amount due to him included in creditors and his share of Goodwill.
(b)  
 ` 10,000 included in creditors is payable to Abhay which is to be transferred to his Capital Account.
(c) Furniture is to reduced by  
 ` 3,000 and Plant and Machinery is to be increased to    ` 1,98,000.
(d) Stock is overvalued by  
 ` 4,000.
(e) A Provision for Doubtful Debts is to be created @ 5%.
(f) Goodwill is to be valued at 2 years' purchase of average profit for four years. Profits of four years ended 31st March were as follows: 2023 −  ` 25,000, 2022 − 
` 10,000, 2021 − ` 2,500, and 2020 − ` 2,500.
Pass the Journal entries for the above arrangement.

Answer:


In the books of the Atul, Amit and Abhay

Journal

Date

Particulars

 

L.F.

Debit
`

Credit
`

2023

 

 

 

 

 

April 01

Creditors A/c

Dr.

 

10,000

 

 

  To Abhay’s Capital A/c

 

 

 

10,000

 

(Being amount due to Abhay transferred to his Capital A/c)

 

 

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

60,000

 

 

  To Abhay’s Capital A/c

 

 

 

55,000

 

  To Premium for Goodwill A/c (WN1)

 

 

 

5,000

 

(Being Capital and goodwill paid by the new partner)

 

 

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

5,000

 

 

  To Atul’s Capital A/c

 

 

 

3,000

 

  To Amit’s Capital A/c

 

 

 

2,000

 

(Being premium for goodwill adjusted in 3:2)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

9,500

 

 

  To Furniture A/c

 

 

 

3,000

 

  To Stock A/c

 

 

 

4,000

 

  To Provision for Doubtful Debts A/c

 

 

 

2,500

 

(Being assets revalued and liabilities reassessed)

 

 

 

 

 

 

 

 

 

 

 

Plant & Machinery A/c

Dr.

 

18,000

 

 

  To Revaluation A/c

 

 

 

18,000

 

(Being appreciation in plant & machinery provided for)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c (WN2)

Dr.

 

8,500

 

 

  To Atul’s Capital A/c

 

 

 

5,100

 

  To Amit’s Capital A/c

 

 

 

3,400

 

(Being revaluation profit transferred to partner’s capital A/c)

 

 

 

 

 

 

 

 

 

 


Working Notes:

1. Calculation of Goodwill brought in by Abhay:

Average Profits

=

(Normal profits of four given years)/Number of years

 

=

   ` (25,000 + 10,000 + 2,500 + 2,500)/4=    ` 10,000

Goodwill

=

Average Profits × No. of years of Purchase

 

=

   `(10,000 × 2) =    ` 20,000

Goodwill brought in by Abhay

=

   `(20,000 × 1/4) =    ` 5,000


2. Calculation of Revaluation Profit/Loss:
Debit side total =  
 ` (3,000 + 4,000 + 2,500) =    ` 9,500 Credit side total=    ` 18,000 Gain on Revaluation =    ` (18,000 – 9,500) =    ` 8,500

 

Question 73: Sunaina and Tamanna are partners in a firm sharing profits and losses in the ratio of 3:2.Their Balance Sheet as at 31st March, 2020 stood as follows:


Liabilities

`

Assets

`

Capital A/cs:

 

Plant and Machinery

1,20,000

Sunaina

Tamanna

60,000

80,000

1,40,000

Land and Building

1,40,000

Current A/cs:

Sunaina

Tamanna

 

10,000

30,000

 

 

40,000

Debtors

Less: Provision for Doubtful Debts

1,90,000

40,000

 

1,50,000

General Reserve

Workmen Compensation Reserve

Creditors

1,20,000

50,000

1,50,000

Stock

Cash

Goodwill

40,000

30,000

1,50,000

 

5,00,000

 

5,00,000

 

They agreed to admit Pranav into partnership for 1/5th share of profits on 1st April, 2020, on the following terms:

(a) All Debtors are good.

(b) Value of Land and Building to be increased to `1,80,000.

(c) Value of Plant and Machinery to be reduced by `20,000.

(d) The liability against Workmen's Compensation Fund is determined at `20,000 which is to be paid later in the year.

(e) Anil, to whom `40,000 were payable (already included in above creditors), drew a bill of exchange for 3 months which was duly accepted.

(f) Pranav to bring in capital of `1,00,000 and `10,000 as premium for goodwill in cash.

Journalise. (CBSE Sample Paper 2020)

 

Answer:


Date

Particulars

` (Dr.)

` (Cr.)

 

Debtors A/c

Land and Building A/c

  To Revaluation A/c

(Being Increase in Value of Debtors ,Land and Building )

Dr.

Dr.

40,000

40,000

 

 

 

80,000

 

Revaluation A/c

  To Plant and Machinery A/c

(Being Decrease in Value of Plant and Machinery )

Dr.

20,000

 

20,000

 

Revaluation A/c

  To Sunaina’s Current A/c

  To Tamanna’s Current A/c

(Being Distribution of revolution profit )

Dr.

60,000

 

36,000

24,000

 

Creditors A/c

  To Bills Payables A/c

(Being Bills exchange accepted )

Dr.

40,000

 

40,000

 

Workmen Compensation Reserve A/c

To Workmen Compensation Claim A/c

To Sunaina’s Current A/c

To Tamanna’s Current A/c

(Being Workmen Compensation Claim is transferred to Workmen Compensation Reserve A/c and balance is transferred to partners Current A/c)

 

50,000

 

20,000

18,000

12,000

 

General Reserve A/c

To Sunaina’s Current A/c

To Tamanna’s Current A/c

(Being general reserve is transferred to partners Current A/c)

Dr.

1,20,000

 

72,000

48,000

 

Cash A/c

To Sunaina’s Current A/c

To Tamanna’s Current A/c

(Being Premium for goodwill is transferred to partners Current A/c in sacrificing ratio)

 

1,10,000

 

6,000

4,000

 

Sunaina’s Current A/c

Tamanna’s Current A/c

To Goodwill  A/c

(Being old goodwill is Written off in old ratio)

 

12,000

8,000

 

 

20,000

 

 

Question 74:


Following is the Balance Sheet of Jay and Veeru as at 31st March, 2023 who are partners in a firm sharing profits and losses in the ratio of 3 : 2 respectively:
 

Liabilities

`

Assets

     `

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

Jay

1,80,000

 

Patents

 

44,400

Veeru

90,000

2,70,000

Investments

24,000

Current A/cs:

 

Fixed Assets

 

2,16,000

Jay

30,000

 

Goodwill

30,000

Veeru

6,000

36,000

 

 

 

 

 

 

 

 

3,87,000

 

3,87,000

 

 

 

 


Sri is admitted as a new partner on 1st April, 2023 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) 
Jay takes over the Investments at an agreed value of    ` 18,000.
(e) New Profit-sharing Ratio of partners will be 4 : 3 : 2.
(f) Sri will bring in   
 ` 60,000 as his capital by cheque.
(g) Sri 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
Jay and Veeru.  
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

`

Particulars

`

Prov. for D. Debts

600

Accrued Income

4,500

Outstanding Rent

15,000

Loss transferred to

 

Investments

6,000

 Jay’s Current A/c

10,260

 

 

 Veeru’s Current A/c

6,840

 

 

 

 

 

21,600

 

21,600

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

Jay

Veeru

Sri

Particulars

Jay

Veeru

Sri

 

 

 

 

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

Jay

Veeru

Sri

Particulars

Jay

Veeru

Sri

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, 2023

Liabilities

`

Assets

`

Capital A/cs:

 

Patents

44,400

Jay

1,80,000

 

Fixed Assets

2,16,000

Veeru

90,000

 

Accrued Income

4,500

Sri

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

Jay

17,940

 

 

 

Veeru

6,960

24,900

 

 

Creditors

 

45,000

 

 

 

4,14,900

 

4,14,900

 

 

 

 

 

Journal

Particulars

L.F.

Debit

`

Credit

`

Bank A/c

Dr.

 

96,000

 

To Sri’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 Jay’s Current A/c

 

 

25,200

To Veeru’s Current A/c

 

 

10,800

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

 

 

 

 

 

 

 

Jay 's Current A/c                                            Dr.

 

12,600

 

Veeru 's Current A/c                                            Dr.

 

5,400

 

  To BankA/c

 

 

18,000

(Half of goodwill withdrawn by partners)

 

 

 


Working Notes:

WN1 Calculation of Sri 's Share of Premium for Goodwill

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

Firm's Goodwill=81,000×2=   ` 1,62,000

Sri 's share=1,62,000×2/9=   ` 36,000

   ` 36,000 will be distributed between Jay and Veeru in sacrificing ratio.

WN2 Calculation of  Sacrificing Ratio

Sacrificing Ratio=Old Ratio-New Ratio

Jay '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

Jay 's share=36,000×7/10=   ` 25,200

Veeru 's share=36,000×3/10=   ` 10,800

WN4 Distribution of Loss on Revaluation


Jay 's share=17,100×3/5=   ` 10,260

Veeru 's share=17,100×2/5=   ` 6,840

 

Adjustment of the Old Partners' Capitals on the Basis of New or Incoming Partner's Capital

 

Question 75:


X and Y were partners in the profit-sharing ratio of 3 : 2. Their balance sheet as at 31st March, 2022 as follows:

 

                  BALANCE SHEET as at 31st March, 2022                 

Liabilities

`

Assets

`

Creditors

56,000

Plant and Machinery

70,000

General Reserve

14,000

Buildings

98,000

Capital A/cs:

 

Stock

21,000

X-1,19,000

 

Debtors        42,000

 

Y-1,12,000

2,31,000

Less: Provision 7,000

35,000

 

 

Cash in Hand

77,000

 

 

 

 

 

3,01,000

 

3,01,000

Z was admitted for 1/6th share on the following terms:

(i) Z will bring ` 56,000 as his share of capital, but was not able to bring any amount to compensate the sacrificing partners.

(ii) Goodwill of the firm is valued at ` 84,000.

(iii) Plant and Machinery were found to be undervalued by ` 14,000 Building was to brought up to ` 1,09,000.

(iv) All debtors are good.

(v) Capitals of X and Y will be adjusted on the basis of Z's share and adjustments will be done by opening necessary current accounts.

You are required to prepare Revaluation Account and Partners' Capital Accounts. (CBSE Sample Paper 2023)

 

Answer:


Revaluation Account

Dr.

 

Cr.

Particulars

`

Particulars

`

Profit transferred to

 

 

Plant and Machinery

14,000

X’s Capital - 19,200

 

 

Building

11,000

Y’s Capital - 12,800

32,000

Provision for Doubtful debts

7,000

 

 

 

 

 

32,000

 

32,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Current A/c

-

24,000

-

Balance b/d

1,19,000

1,12,000

-

Balance c/d

1,68,000

1,12,000

56,000

Revaluations A/c

19,200

12,800

-

 

 

 

 

General Reserve  A/c

8,400

5,600

-

 

 

 

 

Cash A/c

-

-

56,000

 

 

 

 

Z’s Current A/c

8,400

5,600

 

 

 

 

 

X’s Current A/c

13,000

 

 

 

 

 

 

 

 

 

 

1,68,000

1,36,000

56,000

 

1,68,000

1,36,000

56,000

 

 

 

 

 

 

 

 

 

Working notes:

1.      Treatment of goodwill

Z’s Share of Goodwill =84,000×1/6=14,000

S and Y Will be compensated as follows:

X =14,000×3/5=8,400

Y =14,000×2/5=5,600

 

Journal entry for adjustment of Goodwill

Z’s capital A/c

Dr.

14,000

 

To X’s capital A/c

To Y’s capital A/c

 

 

8,400

5,600

 

2.      Capital adjustments

 

New capital of firm on the basis of Z’s capital

=56,000×6/1=3,36,000

 

Share of each partner in new capital of firm

Z’s Share of capital is 56,000

Remaining capital of X and Y (3,36,000-56,000=2,80,000)

X =2,80,000×3/5=1,68,000

Y =2,80,000×2/5=1,12,000

 

Journal entry for adjustment of Capital

X’s Current A/c

Dr.

13,000

 

To X’s capital A/c

(Being Capital increased by adjustments)

 

 

13,000

Y’s Capital A/c

Dr.

24,000

 

To Y’s Current A/c

(Being Capital Decreased by adjustments)

 

 

24,000

 

 

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