Question 51:
Balance Sheet of X, Y and Z who shared
profits in the ratio of 5 : 3 : 2, as on 31st March, 2022
was as follows:
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Liabilities |
` |
Assets |
` |
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Sundry Creditors |
39,750 |
Bank (Minimum Balance) |
15,000 |
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Employees' Provident Fund |
5,250 |
Debtors |
97,500 |
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Workmen Compensation Reserve |
22,500 |
Stock |
82,500 |
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Capital A/cs: |
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Fixed Assets |
1,87,500 |
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X |
1,65,000 |
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Y |
84,000 |
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Z |
66,000 |
3,15,000 |
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3,82,500 |
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3,82,500 |
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Y retired on 1st April, 2022 and it was agreed that:
(i) Goodwill of the firm is valued at ` 1,12,500 and Y's share of
it be adjusted into the accounts of X and Z who are
going to share future profits in the ratio of 3 : 2.
(ii) Fixed Assets be appreciated by 20%.
(iii) Stock be reduced to
` 75,000.
(iv) Y be paid amount brought in by X and Z so as
to make their capitals proportionate to their new profit-sharing ratio.
Prepare Revaluation Account, Capital Accounts of all partners and the Balance
Sheet of the New Firm.
Answer:
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Revaluation Account |
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Dr. |
|
Cr. |
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Particulars |
( `) |
Particulars |
( `) |
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Stock |
7,500 |
Fixed Assets |
37,500 |
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Revaluation Profit |
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X’s Capital A/c |
15,000 |
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Y’s Capital A/c |
9,000 |
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Z’s Capital A/c |
6,000 |
30,000 |
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37,500 |
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37,500 |
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Partners’ Capital Accounts |
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Dr. |
Cr. |
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Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
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Y’s Capital A/c |
11,250 |
- |
22,500 |
Balance b/d |
1,65,000 |
84,000 |
66,000 |
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|
Bank |
- |
1,33,500 |
- |
General Reserve |
11,250 |
6,750 |
4500 |
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Balance c/d |
2,20,500 |
- |
1,47,000 |
Revaluation (Profit) |
15,000 |
9,000 |
6,000 |
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X’s Capital A/c |
- |
11,250 |
- |
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Z’s Capital A/c |
- |
22,500 |
- |
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Bank A/c |
40,500 |
- |
93,000 |
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2,31,750 |
1,33,500 |
1,69,500 |
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2,31,750 |
1,33,500 |
1,69,500 |
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Balance
Sheet as
on March 31, 2022 |
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Liabilities |
( `) |
Assets |
( `) |
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|
Sundry Creditors |
39,750 |
Bank |
15,000 |
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|
Employees Provident Fund |
5,250 |
Debtors |
97,500 |
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Capitals: |
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Stock |
75,000 |
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X |
2,20,500 |
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Fixed Assets |
2,25,000 |
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Z |
1,47,000 |
72,000 |
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4,12,500 |
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4,12,500 |
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Working Notes:
New Capital = 1,80,000 + 54,000 + 1,33,500 = ` 3,67,500
X's New Capital=3,67,500×3/5=2,20,500
Z's New Capital=3,67,500×2/5=1,47,500
X brings in ` 40,500
(2,20,500 – 1,80,000)
Z brings in ` ` 93,000 (1,47,500 – 54,000)
Question 52:
Sushil, Satish and Samir are
partners sharing profits in the ratio of 5 : 3 : 2. Satish
retires on 1st April, 2022 from the firm, on which date capitals of Sushil,
Satish and
Samir after all adjustments are ` 1,03,680, ` 87,840 and ` 26,880 respectively. The Cash and
Bank Balance on that date was ` 9,600. Satish is to be paid through
amount brought in by Sushil and Samir in such a way as to make
their capitals proportionate to their new profit-sharing ratio which will be Sushil
3/5 and Samir 2/5. Calculate the amount to be paid or to be
brought in by the continuing partners assuming that a minimum Cash and Bank
balance of `
7,200 was to be maintained and pass the necessary Journal entries.
Answer:
Total capital of firm before retirement = 1,03,680+87,840+26,880 = ` 2,18,400
Availability of cash = 9,600-7,200 (Minimum Balance) = ` 2,400
Combined new capital of Sushil and Samir =` 2,16,000
Sushil's new capital = 2,16,000×3/5=` 1,29,600
Existing capital of Sushil= ` 1,03,680
So, Sushil has to bring = 1,29,600−1,03,680= ` 25,920
Samir's new capital = 2,16,000×2/5=` 86,400
Existing capital of Samir = ` 26,880
So, Samir has to bring = 86,400−26,880=` 59,520
Question 53:
A, B and C are
partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Their Balance Sheet as at 31st March, 2022 is:
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Liabilities |
( `) |
Assets |
( `) |
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Creditors |
30,000 |
Cash in Hand |
18,000 |
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Bills Payable |
16,000 |
Debtors |
25,000 |
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General Reserve |
12,000 |
Less: Provision for Doubtful Debts |
3,000 |
22,000 |
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Capital A/cs: |
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Stock |
|
18,000 |
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A |
40,000 |
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Furniture |
30,000 |
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B |
40,000 |
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Machinery |
70,000 |
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C |
30,000 |
1,10,000 |
Goodwill |
10,000 |
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1,68,000 |
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1,68,000 |
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B retires on 1st April, 2022 on the following terms:
(a) Provision for Doubtful Debts be raised by ` 1,000.
(b) Stock to be reduced by 10% and Furniture by 5%.
(c) There is an outstanding claim of damages of ` 1,100 and it is to be provided for.
(d) Creditors will be written back by ` 6,000.
(e) Goodwill of the firm is valued at ` 22,000.
(f) B is paid in full with the cash brought in by A and C in
such a manner that their capitals are in proportion to their profit-sharing
ratio and Cash in Hand remains at ` 10,000.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet
of A and C.
Answer:
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Revaluation
Account |
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Dr. |
Cr. |
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Particulars |
( `) |
Particulars |
( `) |
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Provision for doubtful debts |
1,000 |
Creditors |
6,000 |
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Stock Furniture |
1,800 1,500 |
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Outstanding claim of damage Capital a/c; A=600×3/6=300 B=600×2/6=200 C=600×1/6=100 |
1,100 600 |
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6,000 |
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6,000 |
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Partners’
Capital Account |
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Dr. |
Cr. |
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Particulars |
Kusum |
Sneh |
Usha |
Particulars |
Kusum |
Sneh |
Usha |
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B’s Capital A/c |
5,500 |
– |
1,833 |
Balance b/d |
40,000 |
40,000 |
30,000 |
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Goodwill a/c |
5,000 |
3,333 |
1,667 |
A’s capital a/c |
4,286 |
5,500 |
4,286 |
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Cash A/c |
– |
48,200 |
– |
C’s Capital A/c |
80,000 |
1,833 |
– |
|
Balance c/d |
35,800 |
– |
28,600 |
Revaluation a/c |
300 |
200 |
100 |
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General Reserve |
6,000 |
4,000 |
2,000 |
||||
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|
46,300 |
51,533 |
32,100 |
|
46,300 |
51,533 |
32,100 |
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Cash A/c |
– |
– |
2,450 |
Balance b/d |
35,800 |
– |
28,600 |
|
Balance
c/d |
78,450 |
– |
26,150 |
Cash A/c |
42,650 |
– |
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|
78,450 |
28,600 |
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78,450 |
28,600 |
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Balance Sheet as at March 31, 2022 |
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Liabilities |
(
`) |
Assets |
(
`) |
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Creditors |
24,000 |
Cash in hand |
10,000 |
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Bills payables |
16,000 |
Debtors 25,000 |
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Outstanding claim of damage |
1,100 |
Less; prov. 4,000 Stock |
21,000 16,000 |
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Capital A/c : |
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Furniture |
28,500 |
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|
A |
78,450 |
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Machinery |
70,000 |
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C |
26,150 |
1,04,600 |
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1,45,700 |
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1,45,700 |
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Working Notes
WN 1 Calculation of New and Gaining
Ratio
Old
Ratio (A,B and C) = 3:2:1
New
Ratio (A, C) = 3:1
Gaining
Ratio = New Ratio – Old Ratio
A‘s share= 3/4-3/6=18-12/24=6/24
C‘s share= 1/4-1/6=6-4/24=2/24
Therefore gaining Ratio (A, C) = 3:1
WN2 Adjustment of Goodwill
Total
Goodwill of the Firm = 22,000
B’s Share of Goodwill =
22,000×2/6 =7,333
A will compensate =7,333×3/4=5,500
C will compensate =7,333×1/4=1,833
WN3 Adjustment
of Capital
Total capital of the firm
=35,800+48,200+28,600-(18,000-10,000)=1,04,600
A‘s new capital= 1,04,600×3/4=78,450
C‘s new capital= 1,04,600×1/4=26,150
WN4
Closing bank balance =18,000+42,650-48,200-2,450=10,000
Question 54:
The Balance Sheet of Asha, Deepa and
Leta who were sharing profits in the ratio
of 5 : 3 : 2 as at 31st March, 2022 is as follows:
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Liabilities |
` |
Assets |
` |
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Creditors |
50,000 |
Cash at Bank |
40,000 |
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Employees' Provident Fund |
10,000 |
Sundry Debtors |
1,00,000 |
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Profit and Loss A/c |
85,000 |
Stock |
80,000 |
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Capital A/cs: |
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Fixed Assets |
60,000 |
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Asha |
40,000 |
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Deepa |
62,000 |
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Leta |
33,000 |
1,35,000 |
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2,80,000 |
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2,80,000 |
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Asha retired on 1st April, 2022 and Deepa and Leta
decided
to share profits in future in the ratio of 3 : 2
respectively.
The other terms on retirement were:
(a) Goodwill of the firm is to be valued at ` 80,000.
(b) Fixed Assets are to be depreciated to ` 57,500.
(c) Make a Provision for Doubtful Debts at 5% on Debtors.
(d) A liability for claim, included in Creditors for ` 10,000, is settled at ` 8,000.
The amount to be paid to Asha by Deepa and Leta in
such a way that their Capitals are proportionate to their profit-sharing ratio
and leave a balance of
` 15,000 in the Bank Account.
Prepare Profit and Loss Adjustment Account and Partners' Capital Accounts.
Answer:
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Revaluation
Account |
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Dr. |
Cr. |
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Particulars |
( `) |
Particulars |
( `) |
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Fixed Assets A/c (60,000 – 57,500) |
2,500 |
Creditors (10,000 – 8,000) |
2,000 |
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Provision for Doubtful Debts |
5,000 |
Loss on Revaluation transferred to: |
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Asha’s Capital a/c |
2,750 |
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Deepa’s
Capital a/c |
1,650 |
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Leta’s
Capital a/c |
1,100 |
5,500 |
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|
7,500 |
|
7,500 |
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Partners’ Capital Accounts |
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Dr. |
Cr. |
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Particulars |
Asha |
Deepa |
Leta |
Particulars |
Asha |
Deepa |
Leta |
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|
Revaluation A/c (Loss) |
2,750 |
1,650 |
1,100 |
Balance b/d |
40,000 |
62,000 |
33,000 |
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Asha’s Capital A/c |
– |
24,000 |
16,000 |
Profit & Loss A/c |
42,500 |
25,500 |
17,000 |
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Balance c/d |
1,19,750 |
61,850 |
32,900 |
Deepa’s Capital A/c |
24,000 |
– |
– |
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Leta’s Capital A/c |
16,000 |
– |
– |
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|
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|
1,22,500 |
87,500 |
50,000 |
|
1,22,500 |
87,500 |
50,000 |
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Bank A/c |
1,19,750 |
– |
– |
Balance b/d |
1,19,750 |
61,850 |
32,900 |
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Balance c/d |
– |
1,18,500 |
79,000 |
Bank A/c |
– |
56,650 |
46,100 |
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|
1,19,750 |
1,18,500 |
79,000 |
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1,19,750 |
1,18,500 |
79,000 |
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Working Notes
WN
1 Calculation of Gaining Ratio
Old Ratio (Asha, Deepa and Leta)
= 5:3:2
New Ratio (Deepa and Leta)
= 3:2
Gaining Ratio = New Ratio – Old Ratio
|
Deepa’s |
=3/5-3/10 |
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|
=3/10 |
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Leta’s |
=2/5-2/10 |
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|
=2/10 |
Hence, gaining ratio is 3: 2.
WN2 Adjustment of Goodwill
Total Goodwill of the Firm = 80,000
Asha’s Share of
Goodwill = 80,000×5/10=40,000
To be borne
by Gaining partners in their Gaining Ratio i.e. 3:2
Deepa’s Share = 40,000×3/5=24,000
Leta’s Share = 40,000×2/5=16,000
WN3 Adjustment
of Capital
Asha’s Capital before adjustment = 1,19,750
Deepa’s
Capital before adjustment = 61,850
Leta’s
Capital before adjustment = 32,900
Total Capital of New Firm=
Asha's Capital+Deepa's Capital+Leta's Capital+Closing balance of Bank Account-Available Bank Balance=1,19,750+61,850+32,900+15,000-32,000=`1,97,500
New profit sharing ratio=3:2
Deepa’s Share of Goodwill =1,97,500×3/5=1,18,500
Leta’s Share of Goodwill =1,97,500×2/5=79,000
|
Particulars |
Deepa |
Leta |
|
New Capital Balance |
1,18,500 |
79,000 |
|
Adjusted Old Capital Balance |
61,850 |
32,900 |
|
Cash brought in by the Partner |
56,650 |
46,100 |
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WN4
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Cash at Bank A/c |
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Dr. |
Cr. |
||
|
Particulars |
(
`) |
Particulars |
(
`) |
|
Balance b/d |
40,000 |
Creditors |
8,000 |
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Deepa’s Capital A/c |
56,650 |
Asha’s Capital A/c |
1,19,750 |
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Leta’s Capital A/c |
46,100 |
Balance c/d |
15,000 |
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|
1,42,750 |
|
1,42,750 |
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Question 55:
Amrit, Bhanu and Charu were partners in a firm sharing profits equally. Bhanu retired on 30th September, 2021. Profit till the date of retirement was to be estimated based on last year's profit. Profit for the year ended 31st March, 2021, was ` 3,60,000.
Calculate Bhanu's share of profit till his retirement and pass Journal entry/entries for the same when:
(i) The profit-sharing ratio between Amrit and Charu does not change; and
(ii) The new profit-sharing ratio between Amrit and Charu changes to 3:2.
Answer:
|
Date |
Particulars |
|
` |
` |
|
(Case) |
Profit and Loss Suspense A/c |
Dr. |
60,000 |
|
|
1. |
To Bhanu’s Capital A/c |
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|
60,000 |
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|
(Bhanu was compensated for his share of goodwill ) (W.N. – 1) |
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(Case) |
Amrit’s Capital A/c |
Dr. |
48,000 |
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2. |
Charu’s Capital A/c |
Dr. |
12,000 |
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|
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To Bhanu’s Capital A/c |
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|
60,000 |
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|
(Bhanu was compensated for his share of goodwill) (W.N. – 2) |
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Working
notes:
W.N.
– 1 ((i) The profit-sharing
ratio between Amrit and Charu
does not change)
Profit sharing ratio of Amrit, Bhanu and Charu was 1:1:1
Profit for the year ended 31st March, 2021, was ` 3,60,000
Bhanu's share of profit=3,60,000×1×6/3×12=60,000
W.N.-2 ((ii) The new profit-sharing ratio between Amrit and Charu changes to 3:2)
A= 1/3-3/5=5-9/15= -4/15 (Gain)
B= 1/3-2/5=5-6/15= -1/15 (Gain)
Share of A and B in 4:1
A= 60,000×4/5=48,000
A= 60,000×1/5=12,000
Ts Grewal Solution 2022-2023
Click below for more Questions
Class 12 / Volume – I
Chapter 1 – Retirement 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
Question No. 36 To 40
Question No. 41 To 45
Question No. 46 To 50
Question No. 51 To 55
Question No. 56 To 59
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12th TS Grewal’s Accountancy Solutions