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12th | Change in Profit Sharing Ratio Among the Existing Partner | Question No. 31 To 35 | Ts Grewal Solution 2023-2024

Question 31:


Balance Sheet of X and Y, who share profits and losses as 5 : 3, as at 1st April, 2023 is:

 

Liabilities

( `)

Assets

( `)

X's Capital

52,000

Goodwill

8,000

Y's Capital

54,000

Machinery

38,000

General Reserve

4,800

Furniture

15,000

Sundry Creditors

5,000

Sundry Debtors

33,000

Employees' Provident Fund

1,000

Stock

7,000

Workmen Compensation Reserve

10,000

Bank

25,000

 

 

Advertisement Suspense A/c

     800

 

 

 

 

 

1,26,800

 

1,26,800

   

   

 

 


On the above date, they decided to change their profit-sharing ratio to 3 : 5 and agreed upon the following:
(a) Goodwill be valued on the basis of two years' purchase of the average profit of the last three years. Profits for the years ended 31st March, are: 2020  ` 7,500; 2021 −
 ` 4,000; 2023 −  ` 6,500.
(b) Machinery and Stock be revalued at  ` 45,000 and 
` 8,000 respectively.
(c) Claim on account of workmen compensation is  ` 6,000.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm.

Answer:


Revaluation Account

Dr.

Cr.

Particulars

 ( `)

Particulars

 ( `)

Profit transferred to:

 

Machinery

7,000

X’s Capital A/c

5,000

 

Stock

1,000

Y’s Capital A/c

3,000

8,000

 

 

 

8,000

 

8,000

 

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

X

Y

Particulars

X

Y

Advertisement Suspense A/c

500

300

Balance b/d

52,000

54,000

Goodwill A/c

5,000

3,000

General Reserve A/c

3,000

1,800

X’s Capital

3,000

WCF

2,500

1,500

(Adjustment of Goodwill)

 

 

Revaluation A/c (Profit)

5,000

3,000

 

 

 

Y’s Capital A/c

3,000

Balance c/d

60,000

54,000

(Adjustment of Goodwill)

 

 

 

 

 

 

 

 

 

65,500

60,300

 

65,500

60,300

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2023 (after Change in Profit Sharing Ratio)

Liabilities

( `)

Assets

      ( `)

X’s Capital

58,500

Machinery

(38,000 + 7,000)

45,000

Z’s Capital

55,500

Furniture

15,000

Sundry Creditors

5,000

Sundry Debtors

33,000

Employees’ Provident Fund

1,000

Stock (7,000 + 1,000)

8,000

Workmen’s Compensation Reserve

6,000

Bank

25,000

 

1,26,000

 

1,26,000

 

 

 

 

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X and Y) = 5 : 3

New Ratio (X and Y) = 3 : 5

Sacrificing (or Gaining) Ratio = Old Ratio − New Ratio

X's share=5/8−3/8=2/8 (Sacrifice)

Y's share=3/8−5/8=−2/8 (Gain)

 

WN 2 Calculation of New Goodwill

Goodwill = Average Profit × Number of Years Purchase = 6,000 × 2 =  ` 12,000

Average profit= 7,500+4,000+6,500/3=6,000

Goodwill = 6,000 × 2 =  ` 12,000

WN 3 Adjustment of Goodwill

Amount to be debited to X’s capital=12,000×2/8 =3,000

Amount to be debited to Y’s capital=12,000×2/8 =3,000

 

Journal

Date

Particulars

L.F.

Debit

 ( `)

Credit

 ( `)

 

Workmen’s Compensation Reserve A/c

Dr.

 

10,000

 

 

To Workmen’s Compensation Claim A/c

 

 

6,000

 

To X’s Capital A/c

 

 

2,500

 

To Y’s Capital A/c

 

 

1,500

 

(Being Workmen’s compensation claim distributed among partners in their old ratio i.e. 5 : 3)

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

5,000

 

 

Y’s Capital A/c

Dr.

 

3,000

 

 

To Goodwill A/c

 

 

8,000

 

(Being Goodwill written off among partners in their old ratio)

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

500

 

 

Y’s Capital A/c

Dr.

 

300

 

 

To Advertisement Suspense A/c

 

 

800

 

(Being Advertisement Suspense written off among partners in their old ratio)

 

 

 

 

 

 

 

 

 

General Reserve A/c

Dr.

 

4,800

 

 

To X’s Capital A/c

 

 

3,000

 

To Y’s Capital A/c

 

 

1,800

 

(Being General Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

8,000

 

 

To X’s Capital A/c

 

 

5,000

 

To Y’s Capital A/c

 

 

3,000

 

(Being Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

 

 

Y’s Capital A/c

Dr.

 

3,000

 

 

To X’s Capital A/c

 

 

3,000

 

(Being Adjustment of goodwill made)

 

 

 

 

 

 

 

 

Question 32:


Ram, Mohan, Sohan and Hari were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1. On 1st April, 2016, their Balance Sheet was as follows:

BALANCE SHEET OF RAM, MOHAN, SOHAN AND HARI

as on 1st April, 2016

Liabilities

 `

Assets

 `

Capital A/cs:

 

Fixed Assets

9,00,000

 Ram

4,00,000

 

Current Assets

5,20,000

 Mohan 

   4,50,000

 

 

 

 Sohan

2,50,000

 

 

 

 Hari 

2,00,000

13,00,000

 

 

Workmen Compensation Reserve

 

1,20,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,20,000

 

14,20,000

 

 

 

 

 


From the above date, the partners decided to share the future profits in the ratio of 1 : 2 : 3 : 4. For this purpose the goodwill of the firm was valued at  `1,80,000. The partners also agreed for the following:

(a) The Claim for workmen compensation has been estimated at  ` 1,50,000.
(b) Adjust the capitals of the partners according to the new profit-sharing ratio by opening Partners' Current Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.

Answer:


Revaluation Account

Dr.

Cr.

Particulars

 ( `)

Particulars

 ( `)

Provision for Workmen Compensation Claim

30,000

Revaluation Loss

 

 

 

  Ram’s Capital A/c

12,000

 

 

 

  Mohan’s Capital A/c

9,000

 

 

 

  Sohan’s Capital A/c

6,000

 

 

 

  Hari’s Capital A/c

3,000

30,000

 

 

 

 

 

30,000

 

30,000

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

Ram

Mohan

Sohan

Hari

Particulars

Ram

Mohan

Sohan

Hari

Revaluation A/c

12,000

9,000

6,000

3,000

Balance b/d

4,00,000

4,50,000

2,50,000

2,00,000

Ram’s Capital A/c

 

 

13,500

40,500

Sohan’s Capital A/c

13,500

4,500

 

 

Mohan’s Capital A/c

 

 

4,500

13,500

Hari’s Capital A/c

40,500

13,500

 

 

Current A/c’s

3,15,000

2,05,000

 

 

Current A/c’s

 

 

1,55,000

3,65,000

Balance c/d

1,27,000

2,54,000

3,81,000

5,08,000

 

 

 

 

 

 

4,54,000

4,68,000

4,05,000

5,65,000

 

4,54,000

4,68,000

4,05,000

5,65,000

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet

Liabilities

 ( `)

Assets

 ( `)

Capital A/c

 

Fixed Assets

9,00,000

  Ram

1,27,000

 

Current Assets

5,20,000

  Mohan

2,54,000

 

Current A/c

 

  Sohan

3,81,000

 

  Ram

3,15,000

 

  Hari

5,08,000

12,70,000

  Mohan

2,05,000

5,20,000

Current A/c

 

 

 

  Sohan

1,55,000

 

 

 

  Hari

3,65,000

5,20,000

 

 

Claim against WCF

1,50,000

 

 

 

 

 

 

 

19,40,000

 

19,40,000

 

 

 

 

 

Working Notes

 

WN1: Calculation of Gaining/Sacrificing Ratio

Old Ratio 4:3:2:1 

New Ratio 1:2:3:4

Sacrificing Ratio=Old Ratio-New Ratio

Sacrificing Ratio of Ram=4/10-1/10=3/10(sacrificing)

Sacrificing Ratio of Mohan=3/10-2/10=1/10(sacrificing)

Gaining Ratio of Sohan=2/10-3/10=-1/10(gaining)

Gaining Ratio of Hari=1/10-4/10=-3/10(gaining)

(a) Sohan will compensate Ram and Mohan in the ratio 3:1

(b) Hari will compensate Ram and Mohan in the ratio of 3:1

Adjustment for Goodwill

Sohan’s Capital A/c

Dr.

 

18,000

 

Hari’s Capital A/c

Dr.

 

54,000

 

  To Ram’s Capital A/c

 

 

 

54,000

  To Mohan’s Capital A/c

 

 

 

18,000

(Being Sohan and Hari will compensate Ram and Mohan in their gaining ratio)

 

 

 

 

 

 WN2: Calculation of Adjusted Capital

Ram = 4,54,000 – 12,000 =  ` 4,42,000

Mohan = 4,68,000 – 9,000 =  ` 4,59,000

Sohan = 2,50,000 – 24,000 =  ` 2,26,000

Hari = 2,00,000 – 57,000 =  ` 1,43,000

Total Combined Capital = 12,70,000

 

WN3: Calculation of New Capital
Ram=12,70,000×1/10=1,27,000

Mohan=12,70,000×2/10=2,54,000

Sohan=12,70,000×3/10=3,81,000

Hari=12,70,000×4/10=5,08,000

 

Question 33:


Suresh, Ramesh, Mahesh and Ganesh were partners in a firm sharing profits in the ratio of 2 : 2 : 3 : 3. On 1st April, 2016, their Balance Sheet was as follows:

BALANCE SHEET OF SURESH, RAMESH, MAHESH AND Ganesh

as on 1st April, 2016

Liabilities

( `)

Assets

( `)

Capital A/cs:

 

Fixed Assets

6,00,000

 Suresh

1,00,000

 

Current Assets

3,45,000

 Ramesh 

   1,50,000

 

 

 

 Mahesh

2,00,000

 

 

 

 Ganesh  

2,50,000

7,00,000

 

 

Sundry Creditors

 

1,70,000

 

 

Workmen Compensation Reserve

 

75,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,45,000

 

9,45,000

 

 

 

 

 

From the above date, the partners decided to share the future profits equally. For this purpose the goodwill of the firm was valued at ` 90,000. It was also agreed that:
(a) Claim against Workmen Compensation Reserve will be estimated at
`1,00,000 and fixed assets will be depreciated by 10%.
(b) The Capitals of the partners will be adjusted according to the new profit-sharing ratio. For this, necessary cash will be brought or paid by the partners as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.

Answer:


Revaluation Account

Dr.

Cr.

Particulars

 ( `)

Particulars

 ( `)

Depreciation on Fixed Assets A/c

60,000

Revaluation Loss

 

Provision for Claim against WCF

25,000

 Suresh’s Capital A/c

17,000

 

 

 

 Ramesh’s Capital A/c

17,000

 

 

 

 Mahesh’s Capital A/c

25,500

 

 

 

 Ganesh’s Capital A/c

25,500

85,000

 

 

 

 

 

85,000

 

85,000

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

Suresh

Ramesh

Mahesh

Ganesh

Particulars

Suresh

Ramesh

Mahesh

Ganesh

Revaluation A/c

17,000

17,000

25,500

25,500

Balance b/d

1,00,000

1,50,000

2,00,000

2,50,000

Mahesh's Capital A/c

2,250

2,250

-

 

-

Suresh’s Capital A/c

-

-

2,250

2,250

Ganesh's Capital A/c

2,250

2,250

-

-

Ramesh’s Capital A/c

-

-

2,250

2,250

Cash A/c

-

-

25,250

75,250

Cash A/c

75,250

25,250

-

-

Balance c/d

1,53,750

1,53,750

1,53,750

1,53,750

 

 

 

 

 

 

1,75,250

1,75,250

2,04,500

2,54,500

 

1,75,250

1,75,250

2,04,500

2,54,500

 

 

 

 

 

 

 

 

 

 

   

Balance Sheet

Liabilities

 ( `)

Assets

 ( `)

Capital A/c

 

Fixed Assets

(Less depreciation)

5,40,000

  Suresh's Capital A/c

1,53,750

 

Current Assets

3,45,000

  Ramesh's Capital A/c

1,53,750

 

 

 

  Mahesh's Capital A/c

1,53,750

 

 

 

  Ganesh's Capital A/c

1,53,750

6,15,000

 

 

Claim against WCF

1,00,000

 

 

Sundry Creditors

1,70,000

 

 

 

8,85,000

 

8,85,000

 

 

 

 


Working Notes


WN1:
Calculation of Gaining/Sacrificing Ratio

Adjustment for Goodwill

Suresh’s Capital A/c

Dr.

 

4,500

 

Ramesh’s Capital A/c

Dr.

 

4,500

 

  To Mahesh’s Capital A/c

 

 

 

4,500

  To Ganesh’s Capital A/c

 

 

 

4,500

(Gaining partners compensate sacrificing partners)

 

 

 

 


WN2: Calculation of Adjusted Capital
Suresh = 1,00,000 – 21,500 =
 ` 78,500
Ramesh = 1,50,000 – 21,500 =
 ` 1,28,500
Mahesh = 2,04,500 – 25,500 =
 ` 1,79,000
Ganesh = 2,54,500 – 25,500 =
 ` 2,29,000
Total Combined Capital = 6,15,000

WN3: Calculation of New Capital
Suresh=6,15,000×1/4=1,53,750

Ramesh=6,15,000×1/4=1,53,750

Mahesh=6,15,000×1/4=1,53,750

Ganesh=6,15,000×1/4=1,53,750

 

 

Ts Grewal Solution 2023-2024

Click below for more Questions

Class 12 / Volume – I

Chapter 3 – Change in Profit-Sharing Ratio Among the Existing Partner

 

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 33