Double Entry Book Keeping Ts Grewal 2017 for Class 12 Commerce Accountancy Chapter 4

Answer:

$\begin{array}{l} a) X : Y : Z = \frac{1}{2} : \frac{3}{10} : \frac{1}{5} = 5 : 3 : 2 (old ratio) \\ Calculation of New Ratio \\ 1) If X retires, then Y and Z will share profits in the ratio of 3 : 2 \\ 2) If Y retires, then X and Z will share profits in the ratio of 5 : 2 \\ 3) If Z retires, then X and Y will share profits in the ratio of 5 : 3 \end{array}$

$\begin{array}{l} b) X : Y : Z = \frac{2}{5} : \frac{2}{5} : \frac{1}{5} = 2 : 2 : 1 (old ratio) \\ Calculation of New Ratio \\ 1) If X Retires, then Y and Z will share profits in the ratio of 2 : 1 \\ 2) If Y Retires, then X and Z will share profits in the ratio of 2 : 1 \\ 3) If Z Retires, then X and Y will share profits in the ratio of 1 : 1 \end{array}$

Note: Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio.

Answer:

Old Ratio (Ram, Mohan and Sohan) = or 3 : 5 : 7

Sohan’s Profit Share =

Ram and Mohan decided to take his share in the ratio of 3 : 2

New Profit Share = Old Profit Share + Share taken from Sohan

∴ New Profit Ratio (Ram and Mohan) = 36 : 39 or 12 : 13

Answer:

$\begin{array}{l} Old Ratio \\ A : B : C = 4 : 4 : 2 or \frac{4}{10} : \frac{4}{10} : \frac{2}{10} \\ Calculation of New Ratio \\ B's share taken by C = \frac{4}{10} \\ A's New share = \frac{4}{10} \\ C's New share = \frac{2}{10} + \frac{4}{10} = \frac{6}{10} \\ ∴ New Ratio = \frac{4}{10} : \frac{6}{10} or 2 : 3 \end{array}$

Answer:

Old Ratio (Kangli, Mangli and Sanvali) = 4 : 3 : 2

New Ratio (Mangli and Sanvali) = 5 : 3

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 21 : 11

Answer:

$\begin{array}{l} A : B : C = \frac{1}{2} : \frac{1}{3} : \frac{1}{6} = 3 : 2 : 1 (Old Ratio) \\ A : C = 3 : 2 (New Ratio) \\ Calculation of Gaining Ratio \\ Gaining Ratio = New Ratio - Old Ratio \\ A = \frac{3}{5} - \frac{3}{6} = \frac{18 - 15}{30} = \frac{3}{30} \\ C = \frac{2}{5} - \frac{1}{6} = \frac{12 - 5}{30} = \frac{7}{30} \\ Gaining Ratio = 3 : 7 \end{array}$

Answer:

$\begin{array}{l} X : Y : Z = \frac{4}{9} : \frac{1}{3} : \frac{2}{9} = 4 : 3 : 2 (Old ratio) \\ X acquired \frac{4}{9} th share of Z and Y acquired \frac{5}{9} th [1 - \frac{4}{9}] share of Z \\ X's Gain = \frac{2}{9} \times \frac{4}{9} = \frac{8}{81} \\ Y's Gain = \frac{2}{9} \times \frac{5}{9} = \frac{10}{81} \\ Gaining Ratio of X : Y = 8 : 10 = 4 : 5 \\ Calculation of New Profit Sharing Ratio \\ X's New Share = \frac{4}{9} + \frac{8}{81} = \frac{36 + 8}{81} = \frac{44}{81} \\ Y's New Share = \frac{3}{9} + \frac{10}{81} = \frac{27 + 10}{81} = \frac{37}{81} \\ New Ratio = 44 : 37 \end{array}$

Answer:

$\begin{array}{l} A : B : C : D = 4 : 3 : 2 : 1 (Old ratio) \\ D acquired \frac{1}{3} rd share of A and C acquired \frac{2}{3} rd [1 - \frac{1}{3}] share of A \\ C's Gain = \frac{4}{10} \times \frac{2}{3} = \frac{8}{30} \\ D's Gain = \frac{4}{10} \times \frac{1}{3} = \frac{4}{30} \\ Gaining Ratio of C : D = 8 : 4 = 2 : 1 \\ Calculation of New Profit Sharing Ratio \\ B's New share = \frac{3}{10} or \frac{9}{30} \\ C's New share = \frac{2}{10} + \frac{8}{30} = \frac{6 + 8}{30} = \frac{14}{30} \\ D's New share = \frac{1}{10} + \frac{4}{30} = \frac{3 + 4}{30} = \frac{7}{30} \\ New Ratio = 9 : 14 : 7 \end{array}$

Answer:

$\begin{array}{l} A : B : C = 2 : 2 : 1 (Old Ratio) \\ A : B = 2 : 2 (New Ratio) \\ Calculation of Gaining Ratio = New Ratio - Old Ratio \\ A's Gain = \frac{2}{4} - \frac{2}{5} = \frac{10 - 8}{20} = \frac{2}{20} \\ B's Gain = \frac{2}{4} - \frac{2}{5} = \frac{10 - 8}{20} = \frac{2}{20} \\ A : B = 1 : 1 \end{array}$

Answer:

$\begin{array}{l} A : B : C = \frac{4}{9} : \frac{1}{3} : \frac{2}{9} = 4 : 3 : 2 (Old ratio) \\ B surrenders \frac{1}{9} th share in favour of A and \frac{2}{9} th share in favour of C \\ Gaining Ratio of A : C = 1 : 2 \\ Calculation of New Profit Sharing Ratio \\ A's New share = \frac{4}{9} + \frac{1}{9} = \frac{5}{9} \\ C's New share = \frac{2}{9} + \frac{2}{9} = \frac{4}{9} \\ New Ratio = 5 : 4 \end{array}$

Answer:

$\begin{array}{l} Calculation of Gaining and New ratio: \\ A:B:C:D = 3 :3:2:1 (Old ratio) \\ A's share = \frac{3}{9} \\ D's Gain = \frac{3}{9} \times \frac{2}{3} = \frac{6}{27} \\ C's Gain = \frac{3}{9} \times \frac{1}{3} = \frac{3}{27} \\ Gaining Ratio o f C:D = 1:2 \\ B's New Share = \frac{3}{9} \times \frac{3}{3} = \frac{9}{27} \\ C's New Share = \frac{2}{9} + \frac{3}{27} = \frac{9}{27} \\ D's New Share = \frac{1}{9} + \frac{6}{27} = \frac{9}{27} \\ B:C:D = 1:1:1 \end{array}$

Answer:

Journal
Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
Naresh’s Capital A/c	Dr.		15,000
Yogesh’s Capital A/c	Dr.		15,000
To Mukesh’s Capital A/c				30,000
(Adjustment Mukesh’s share of goodwill made)

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio = 2 : 2 : 1 : 1

Mukesh retires from the firm.

New Ratio = 1 : 1 : 1

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio (Naresh and Yogesh) = 1 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 90,000

Mukesh’s share of goodwill

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 1 : 1).

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	X’s Capital A/c	Dr.		9,600
	Y’s Capital A/c	Dr.		7,200
	Z’s Capital A/c	Dr.		4,800
	To Goodwill A/c				21,600
	(Goodwill appearing in the books was written–off)

	X’s Capital A/c	Dr.		3,900
	Z’s Capital A/c			3,300
	To Y’s Capital A/c				7,200
	(Goodwill adjusted through Partners’ Capital Accounts)

Working Notes:

WN 1: Calculation of Gaining Ratio

$\begin{array}{l} X : Y : Z = 4 : 3 : 2 (Old Ratio) \\ X : Z = 5 : 3 (New Ratio) \\ Gaining Ratio = New Ratio - Old Ratio \\ X's Gain = \frac{5}{8} - \frac{4}{9} = \frac{45 - 32}{72} = \frac{13}{72} \\ Z's Gain = \frac{3}{8} - \frac{2}{9} = \frac{27 - 16}{72} = \frac{11}{72} \\ Gaining Ratio = 13 : 11 \end{array}$

WN 2: Calculation of Goodwill
Total amount of Goodwill $= 7, 200 \times \frac{9}{3} = Rs 21, 600$

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Y’s Capital A/c	Dr.		15,000
	To Z’s Capital A/c				7,500
	To X’s Capital A/c				7,500
	(Goodwill adjusted through Partners’ Capital Accounts)

Working Notes: Calculation of Gaining Ratio

$\begin{array}{l} Old Ratio = 3 : 2 : 1 \\ New Ratio = 1 : 2 \\ Gaining Ratio = New Ratio - Old Ratio \\ X = \frac{1}{3} - \frac{3}{6} = \frac{2 - 3}{6} = - \frac{1}{6} (Sacrifice) \\ Y= \frac{2}{3} - \frac{2}{6} = \frac{4 - 2}{6} = \frac{2}{6} (Gain) \\ X will get = 45,000 \times \frac{1}{6} = Rs 7,500 \\ Y will give = 45,000 \times \frac{2}{6} = Rs 15,000 \\ Z will get = 45,000 \times \frac{1}{6} = Rs 7,500 \end{array}$

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)

	Profit & Loss Appropriation A/c	Dr.		64,000
	To X’s Capital A/c				46,000
	To Z’s Capital A/c				18,000
	(Profit Shared among new partners)

	X’s Capital A/c	Dr.		70,000
	Z’s Capital A/c	Dr.		50,000
	To Y’s Capital A/c				1,20,000
	(Goodwill adjusted through capital)

Working Notes:

$\begin{array}{l} Calculation of Gaining and New ratio: \\ Old ratio o f X, Y & Z = 4 :3:1 \\ Gaining ratio o f X & Z = 7:5 \\ Y's share = \frac{3}{8} \\ X's Gain = \frac{3}{8} \times \frac{7}{12} = \frac{21}{96} \\ Z's Gain = \frac{3}{8} \times \frac{5}{12} = \frac{15}{96} \\ X's New Share = \frac{4}{8} + \frac{21}{96} = \frac{69}{96} \\ Z's New Share = \frac{1}{8} + \frac{15}{96} = \frac{27}{96} \\ X:Z = 69 : 27 o r 23 :9. \end{array}$

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	X’s Capital A/c	Dr.		5,000
	Y’s Capital A/c			25,000
	To Z’s Capital A/c				30,000
	(Goodwill adjusted through Partners’ Capital Accounts)

Working Notes: Calculation of Gaining Ratio

$\begin{array}{l} Old Ratio = 1 : 2 : 3 \\ New Ratio = 1 : 3 \\ Gaining Ratio = New Ratio - Old Ratio \\ X = \frac{1}{4} - \frac{1}{6} = \frac{3 - 2}{12} = \frac{1}{12} \\ Y= \frac{3}{4} - \frac{2}{6} = \frac{9 - 4}{12} = \frac{5}{12} \\ X : Y = 1 : 5 \\ Z's share of Goodwill = Rs 30,000 (3, 00,000 - 2, 70,000) \end{array}$

Answer:

Revaluation Account
Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Plant and Machinery (40,000 × 10%)		4,000	Building (1,00,000 × 20%)	20,000
Provision for Doubtful Debts		1,000	Stock of Finished Goods	5,000
Stock of Raw Materials		2,000	Computer	2,000
Workmen’s Compensation Claim		5,000
Profit transferred to:
A’s Capital A/c	6,000
B’s Capital A/c	6,000
C’s Capital A/c	3,000	15,000
		27,000		27,000

Journal
Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
Building A/c	Dr.		20,000
Stock of Finished Good A/c	Dr.		5,000
Computer A/c	Dr.		2,000
To Revaluation A/c				27,000
(Increase in value Assets transferred to Revaluation Account)

Revaluation A/c	Dr.		12,000
To Plant and Machinery A/c				4,000
To Provision for Doubtful Debts A/c				1,000
To Stock of Raw Material A/c				2,000
To Workmen’s Compensation Claim A/c				5,000
( Decrease in value of Assets and increase in Liabilities transferred to Revaluation Account)

Revaluation A/c	Dr.		15,000
To A’s Capital A/c				6,000
To B’s Capital A/c				6,000
To C’s Capital A/c				3,000
(Revalution Profit transferred to Partners’ Capital accounts)

Answer:

Revaluation Account
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Plant & Machinery A/c		3,500	Stock A/c	5,000
Motor Van A/c		1,200	Building A/c	4,500
Outstanding bill for Repairs		2,500	Prepaid fire insurance	2,500
Provision for Doubtful Debts A/c		1,950
Profit transferred to:
A’s Capital A/c	1,425
B’s Capital A/c	950
C’s Capital A/c	475	2,850

		9,500		9,500

B’s Capital Account
Particulars	Amount (Rs)		Amount (Rs)
B’s Loan A/c (Balancing figure)	40,950	Balance b/d	30,000
		General Reserve A/c	4,000
		A’s Capital A/c	4,500
		C’s Capital A/c	1,500
		Revaluation A/c	950
	40,950		40,950

Working Notes: Calculation of B’s Share of Goodwill

\begin{array}{l} B’s Share of Goodwill = 18, 000 \times \frac{1}{3} = Rs 6, 000 \\ Gaining Ratio (A : C) = 3 : 1 \\ ∴ A will compensate = 6,000 \times \frac{3}{4} = Rs 4,500 \\ C will compensate = 6,000 \times \frac{1}{4} = Rs 1,500 \end{array}

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	X’s Capital A/c	Dr		3,000
	Z’s Capital A/c	Dr.		7,000
	To Y’s Capital A/c				10,000
	(Revaluation adjusted through capital)

Working Notes:

WN1: Calculation of Gaining Ratio

$\begin{array}{l} X:Y:Z = 3 :2:1 (Old ratio) \\ X:Z = 3:2(New ratio) \\ X's Gain = \frac{3}{5} - \frac{3}{6} = \frac{3}{30} \\ Z's Gain = \frac{2}{5} - \frac{1}{6} = \frac{7}{30} \\ X:Z = 3:7 \end{array}$

WN2: Adjustment for Y's share

$\begin{array}{l} Y's Share in Revaluation = 30,000 \times \frac{2}{6} = Rs 10,000 \\ It should be debited to X's Capital A/c and Z's Capital A/c in the ratio of 3:7 \end{array}$

WN 3: Adjustment for Revaluation of Assets & Liabilities

Particulars		Amount Rs
Land and Building		50,000
Trade Creditors		5,000
Less:
Plant and Machinery		10,000
Outstanding Expenses		15,000
Profit		30,000

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	General Reserve A/c	Dr.		60,000
	To X’s Capital A/c				30,000
	To Y’s Capital A/c				20,000
	To Z’s Capital A/c				10,000
	(General reserve distributed among the partners in old ratio)

	X’s Capital A/c	Dr.		15,000
	Y’s Capital A/c	Dr.		10,000
	Z’s Capital A/c	Dr.		5,000
	To Profit & Loss A/c				30,000
	(Debit balance of Profit & Loss distributed among the partners in old ratio)

	Workmen Compensation Reserve A/c	Dr.		24,000
	To X’s Capital A/c				12,000
	To Y’s Capital A/c				8,000
	To Z’s Capital A/c				4,000
	(Workmen compensation reserve distributed among the partners in old ratio)

Note: Employees provident fund is a statutory liability of the firm, thus, it will not be distributed among the partners.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	P’s Capital A/c	Dr		3,000
	R’s Capital A/c	Dr.		7,000
	To Q’s Capital A/c				10,000
	(Reserves adjusted through capital)

Working Notes:

WN1: Calculation of Gaining Ratio

$\begin{array}{l} P:Q:R = 3 :2:1 (Old ratio) \\ P:R = 3:2 (New ratio) \\ P's Gain = \frac{3}{5} - \frac{3}{6} = \frac{3}{30} \\ R's Gain = \frac{2}{5} - \frac{1}{6} = \frac{7}{30} \\ P:R = 3:7 \end{array}$

WN2: Calculation of Amount to be Adjusted

$\begin{array}{l} Amount to be adjusted = General Reserve + Contingency Reserve + P&L - Advertisement Suspense \\ = 30,000+5,000+15,000 - 20,000 = Rs 30,000 \\ Q's share = 30,000 \times \frac{2}{6} = Rs 10,000 \\ Rs 10,000 to be charged from P&R in the ratio of 3:7 \end{array}$

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	X’s Capital A/c	Dr		20,000
	Z’s Capital A/c	Dr.		10,000
	To Y’s Capital A/c				30,000
	(Reserves adjusted through capital)

Working Notes:

WN1: Calculation of Gaining Ratio

$\begin{array}{l} X:Y:Z = 1 :1:1 (Old ratio) \\ X:Z = 5 :4(New ratio) \\ X's Gain = \frac{5}{9} - \frac{1}{3} = \frac{2}{9} \\ Z's Gain = \frac{4}{9} - \frac{1}{3} = \frac{1}{9} \\ X:Z = 2 :1 \end{array}$

WN 2: Amount to be adjusted

Particulars	(Rs)
General Reserve	50,000
+ Contingency Reserve	5,000
+ Profit and Loss Account	30,000
+ Investment Fluctuation Reserve	5,000
+ Workmen Compensation Reserve	10,000
$-$ Advertisement Suspense	10,000
Total	90,000

$\begin{array}{l} Y's share = 90,000 \times \frac{1}{3} = Rs 30,000 to be charged from X and Z in the ratio of 2:1 \end{array}$

Answer:

Revaluation Account
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Plant & Machinery A/c		2,000	Stock A/c	6,000
Furniture A/c		1,000	Building A/c	6,000
Provision for Doubtful Debts A/c		500
Profit transferred to:
X’s Capital A/c	3,400
Y’s Capital A/c	3,400
Z’s Capital A/c	1,700	8,500

		12,000		12,000

Partners’ Capital Accounts
Dr.								Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Y’s Capital A/c	5,333		2,667	Balance b/d	40,000	40,000	30,000
Y’s Loan A/c		57,400		X’s Capital A/c		5,333
Balance c/d	44,067		32,033	Z’s Capital A/c		2,667
				Reserve A/c	6,000	6,000	3,000
				Revaluation A/c	3,400	3,400	1,700
	49,400	57,400	34,700		49,400	57,400	34,700

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital A/cs:			Cash		3,000
X	44,067		Sundry Debtors	20,000
Z	32,033	76,100	Less: Provision for Doubtful Debts	1,500	18,500
Creditors		25,000	Furniture	10,000
Bills Payable		12,000	Less: Depreciation	1,000	9,000
Y’s Loan		57,400	Plant & Machinery	40,000
			Less: Depreciation	2,000	38,000
			Stock	30,000
			Add: Appreciation	6,000	36,000
			Land & Building	60,000
			Add: Appreciation	6,000	66,000
		1,70,500			1,70,500

Working Notes: Calculation of Y’s Share of Goodwill

\begin{array}{l} Y’s Share of Goodwill = 20, 000 \times \frac{2}{5} = Rs 8, 000 \\ Gaining Ratio (X : Z) = 2 : 1 \\ ∴ X will compensate = 8,000 \times \frac{2}{3} = Rs 5,333 \\ Z will compensate = 8,000 \times \frac{1}{3} = Rs 2,667 \end{array}

Answer:

Journal
Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
Revaluation A/c	Dr.		400
To Provision for Doubtful Debts A/c				400
(Provision for Doubtful Debts created)

Building A/c	Dr.		7,000
To Revaluation A/c				7,000
(Increase in value of Building transferred to Revaluation Account)

Revaluation A/c	Dr.		6,600
To A’s Capital A/c				3,300
To B’s Capital A/c				2,200
To C’s Capital A/c				1,100
(Revaluation profit distributed among partners in their old ratio)

A’s Capital A/c	Dr.		2,250
C’s Capital A/c	Dr.		750
To B’s Capital A/c				3000
(Share of B’s goodwill adjusted in gaining ratio of A and C)

B’s Capital A/c	Dr.		15,200
To B’s Loan A/c				10,200
To Cash A/c				5,000
(Rs 5,000 paid to B and balance transferred to his Loan Account)

Balance Sheet
as on March 31, 2017 (after B’s Retirement)
Liabilities		Amount Rs	Assets		Amount Rs
Sundry Creators		13,590	Cash (5,900 – 5,000)		900
			Debtors	8,000
B’s Loan A/c		10,200	Less: Provision for Doubtful Debts	400	7,600
Capital A/cs:			Stock		11,690
A	16,050
C	10,350	26,400	Building (23,000 + 7,000)		30,000
		50,190			50,190

Working Notes:

WN 1 Adjustment of Goodwill

Old Ratio (A, B and C) = 3 : 2 : 1

B retires from the firm.

∴ Gaining Ratio = 3 : 1

Goodwill of the firm = Rs 9,000

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 3 : 1).

WN 2

Revaluation Account
Dr.				Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Provision for Doubtful Debts (8,000 × 5%)		400	Building	7,000
Profit transferred to:
A’s Capital A/c	3,300
B’s Capital A/c	2,200
C’s Capital A/c	1,100	6,600
		7,000		7,000

WN 3

Partners’ Capital Accounts
Dr.							Cr.
Particulars	A	B	C	Particulars	A	B	C
B’s Capital A/c (Goodwill)	2,250		750	Balance b/d	15,000	10,000	10,000
Cash		5,000		Revaluation A/c (Profit)	3,300	2,200	1,100
B’s Loan A/c		10,200		A’s Capital A/c (Goodwill)		2,250
Balance c/d	16,050		10,350	B’s Capital A/c (Goodwill)		750
	18,300	15,200	11,100		18,300	15,200	11,100

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
1.	Revaluation A/c	Dr.		1,17,000
	To Debtors A/c				17,000
	To Furniture A/c				40,000
	To Land & Building A/c				60,000
	(Transferred decrease in the value of assets)

2.	Stock A/c	Dr.		19,000
	Plant & Machinery A/c			33,000
	To Revaluation A/c				52,000
	(Transferred increase in the value of assets)

3.	Ram’s Capital A/c	Dr.		32,500
	Shyam’s Capital A/c	Dr.		19,500
	Mohan’s Capital A/c	Dr.		13,000
	To Revaluation A/c				65,000
	(Transferred loss on revaluation)

4.	General Reserve A/c	Dr.		1,00,000
	Workmen Compensation Reserve A/c	Dr.		67,500
	To Ram’s Capital A/c				83,750
	To Shyam’s Capital A/c				50,520
	To Mohan’s Capital A/c				33,500
	(Reserve distributed)

5.	Ram’s Capital A/c	Dr.		9,000
	Shyam’s Capital A/c			9,000
	To Mohan’s Capital A/c				18,000
	(Goodwill adjusted through capital)

6.	Mohan’s Capital A/c	Dr.		1,65,000
	To Bank A/c				1,65,000
	(Cash paid to Mohan)

7.	Bank A/c	Dr.		1,65,000
	To Ram’s Capital A/c				99,000
	To Shyam’s Capital A/c				66,000
	(Cash brought in by Ram and Shyam)

8.	Mohan’s Capital A/c	Dr.		73,500
	To Mohan’s Loan A/c				73,500
	(Balance of capital transferred to loan account)

Revaluation Account
Particulars	Amount (Rs)	Particulars		Amount (Rs)
Debtors A/c	17,000	Stock A/c		19,000
Furniture A/c	40,000	Plant & Machinery A/c		33,000
Land and Building A/c	60,000	Loss transferred to:
		Ram’s Capital A/c	32,500
		Shyam’s Capital A/c	19,500
		Mohan’s Capital A/c	13,000	65,000
	1,17,000			1,17,000

Partners’ Capital Accounts
Dr.								Cr.
Particulars	Ram	Shyam	Mohan	Particulars	Ram	Shyam	Mohan
Revaluation A/c	32,500	19,500	13,000	Balance b/d	4,00,000	6,00,000	2,00,000
Mohan’s Capital A/c	9,000	9,000		General Reserve A/c	50,000	30,000	20,000
Bank A/c			1,65,000	Workmen Compensation Reserve A/c	33,750	20,250	13,500
Mohan’s Loan A/c			73,500	Ram’s Capital A/c			9,000
Balance c/d	5,41,250	6,87,750		Shyam’s Capital A/c			9,000
				Bank A/c	99,000	66,000
	5,82,750	1,16,250	2,51,500		5,82,750	1,16,250	2,51,500

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital A/cs:			Cash		55,000
Ram	5,41,250		Debtors	3,40,000
Shyam	6,87,750	12,29,000	Less: Debtors written-off	17,000	3,23,000
Creditors		1,98,000	Furniture		1,42,500
Bills Payable		92,500	Plant & Machinery		2,35,300
Mohan’s Loan		73,500	Stock		2,00,000
			Land & Building		2,00,000
			Bank		1,61,500
			Computer		1,32,000
			Investments		1,43,700
		15,93,000			15,93,000

Working Notes: Calculation of Gaining Ratio

\begin{array}{l} Ram : Shyam : Mohan = 5 : 3 : 2 (Old Ratio) \\ Ram : Shyam= 3 : 2 (Old Ratio) \\ Ram's Gain = \frac{3}{5} - \frac{5}{10} = \frac{6 - 5}{10} = \frac{1}{10} \\ Shyam's Gain = \frac{2}{5} - \frac{3}{10} = \frac{4 - 3}{10} = \frac{1}{10} \\ R : S = 1 : 1 \\ Mohan’s Share in Goodwill = 90, 000 \times \frac{2}{10} = Rs 18, 000 \end{array}

Answer:

Revaluation Account
Particulars	Amount (Rs)	Particulars		Amount (Rs)
Plant A/c	15,000	Freehold Property A/c		10,000
Stock A/c	5,500	Loss transferred to:
Provision for Doubtful Debts A/c	1,500	A’s Capital A/c	4,800
		B’s Capital A/c	4,800
		C’s Capital A/c	2,400	12,000
	22,000			22,000

Partners’ Capital Accounts
Dr.								Cr.
Particulars	A	B	C	Particulars	A	B	C
Revaluation A/c	4,800	4,800	2,400	Balance b/d	1,25,750	1,00,000	85,000
A’s Capital A/c	−	30,000	−	B’s Capital A/c	30,000	−	15,000
C’s Capital A/c		15,000	−	Bank A/c	−	2,24,300	−
Bank A/c	1,50,950	−	97,600
Balance c/d	−	2,74,500	−

	1,55,750	3,24,300	1,00,000		1,55,750	3,24,300	1,00,000

Bank Account
Particulars	Amount (Rs)		Amount (Rs)
Balance b/d	24,250	A’s Capital A/c	1,50,950
B’s Capital A/c (Balancing Figure)	2,24,300	C’s Capital A/c	97,600
	2,48,550		2,48,550

Balance Sheet as at….
Liabilities	Amount (Rs)	Assets			Amount (Rs)
B’s Capital A/c:	2,74,500	Freehold Property	90,000
Trade Creditors	70,000	Add: Appreciation	10,000		1,00,000
		Plant	1,50,000
		Less: Depreciation	15,000		1,35,000
		Debtors		62,500
		Less: Provision for Doubtful Debts		2,500	60,000
		Stock	55,000
		Less: Depreciation	5,500		49,500

	3,44,500				3,44,500

Answer:

M’s Capital Account
Particulars	Amount (Rs)		Amount (Rs)
Drawings A/c	30,000	Balance b/d	1,12,500
Interest on Drawings A/c	3,000	Interest on Capital A/c	750
M’s Loan A/c (Balancing Figure)	1,50,000	Salary A/c	2,250
		Profit & Loss A/c	37,500
		Goodwill A/c	30,000
	1,83,000		1,83,000

M’s Loan Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2015			2015
March 31	Balance c/d	1,50,000	March 31		M’s Capital A/c	1,50,000
		1,50,000				1,50,000
2016			2015
March 31	Bank A/c (75,000 + 15,000)	90,000	April 01		M’s Capital A/c	1,50,000
March 31	Balance c/d	75,000	2016
			March 31		Interest A/c @ 10%	15,000
		1,65,000				1,65,000
2017			2016
March 31	Bank A/c (75,000 + 7,500)	82,500	April 01		Balance b/d	75,000
			2017
			March 31		Interest A/c @ 10%	7,500
		82,500				82,500

Answer:

P’s Capital Account
Particulars	Amount (Rs)		Amount (Rs)
P’s Loan A/c	46,700	Balance b/d	45,000
		P’s Current A/c	1,700
	46,700		46,700

P’s Current Account
Particulars	Amount (Rs)		Amount (Rs)
Balance b/d	2,300	Goodwill $(12, 000 \times \frac{2}{6})$	4,000
P’s Capital A/c	1,700
	4,000		4,000

P’s Loan Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2010			2010
Dec. 31	Bank A/c	10,000	Dec. 31		P’s Capital A/c	46,700
	Balance c/d	36,700
		46,700				46,700
2011			2011
Dec. 31	Bank A/c	10,000	Jan. 01		Balance b/d	36,700
	Balance c/d	28,902	Dec. 31		Interest A/c	2,202
		39,902				38,902
2012			2012
Dec. 31	Bank A/c	10,000	Jan. 01		Balance b/d	28,902
	Balance c/d	20,636	Dec. 31		Interest A/c	1,734
		30,636				30,636
2013			2013
Dec. 31	Bank A/c	10,000	Jan. 01		Balance b/d	20,636
	Balance c/d	11,874	Dec. 31		Interest A/c	1,238
		21,874				21,874
2014			2014
Dec. 31	Bank A/c	10,000	Jan. 01		Balance b/d	11,874
	Balance c/d	2,586	Dec. 31		Interest A/c	712
		12,586				12,586
2015			2015
Dec. 31	Bank A/c	2,741	Jan. 01		Balance b/d	2,586
			Dec. 31		Interest A/c	155
		2,741				2,741

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2016
April 01	X’s Capital A/c	Dr.		4,000
	Y’s Capital A/c	Dr.		6,000
	Z’s Capital A/c	Dr.		2,000
	To Goodwill A/c				12,000
	(Existing goodwill written-off)

	X’s Capital A/c	Dr.		49,600
	To Y’s Capital A/c				18,600
	To Z’s Capital A/c				31,000
	(Goodwill adjusted by debiting gaining partner and crediting sacrificing partner)

	Land and Building A/c	Dr.		20,000
	Sundry Creditors A/c	Dr.		30,000
	To Revaluation A/c				50,000
	(Increase in value of land & building and decrease in value of creditors recorded in Revaluation Account)

	Revaluation A/c	Dr.		43,000
	To Stock A/c				38,000
	To Provision for Doubtful Debts A/c				5,000
	(Decrease in value of stock and increase in provision for doubtful debts, recorded in revaluation)

	Prepaid Insurance A/c	Dr.		5,000
	To Revaluation A/c				5,000
	(Amount paid for insurance carried forward as unexpired insurance)

	Revaluation A/c	Dr.		12,000
	To X’s Capital A/c				4,000
	To Y’s Capital A/c				6,000
	To Z’s Capital A/c				2,000
	(Profit on revaluation transferred to Partners’ Capital Accounts in old profit sharing ratio of 2 : 3 : 1)

	Workmen Compensation Reserve A/c	Dr.		20,000
	To Workmen Compensation Claim A/c				8,000
	To X’s Capital A/c				4,000
	To Y’s Capital A/c				6,000
	To Z’s Capital A/c				2,000
	(Excess balance of WCR transferred to partners’ capital account)

	Investments Fluctuation Reserve A/c	Dr.		10,000
	To Investments A/c				4,000
	To X’s Capital A/c				2,000
	To Y’s Capital A/c				3,000
	To Z’s Capital A/c				1,000
	(Decrease in market value of investments settled through IFF and excess balance is transferred to partners’ capital accounts)

	X’s Capital A/c	Dr.		4,000
	Y’s Capital A/c	Dr.		6,000
	Z’s Capital A/c	Dr.		2,000
	To Advertisement A/c				12,000
	(Balance of Advertisement Suspense Account is debited to Partners’ Capital Account)

	Z’s Capital A/c	Dr.		3,32,000
	To Bank A/c				1,66,000
	To Z’s Loan A/c				1,66,000
	(Half of the amount is immediately paid to Z and remaining half is transferred to his Loan Account)

Revaluation Account
Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Stock		38,000	Land and Building	20,000
Provision for Doubtful Debts		5,000	Sundry Creditors	30,000
Profit transferred to:			Prepaid Insurance	5,000
X’s Capital A/c	4,000
Y’s Capital A/c	6,000
Z’s Capital A/c	2,000	12,000
		55,000		55,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Y’s Capital A/c	18,600			Balance b/d	1,00,000	2,00,000	3,00,000
Z’s Capital A/c	31,000
Advertisement Suspense A/c	4,000	6,000	2,000	Revaluation A/c	4,000	6,000	2,000
Goodwill A/c	4,000	6,000	2,000	Workmen Compensation Reserve	4,000	6,000	2,000
Bank A/c			1,66,000	Investment Fluctuation Reserve	2,000	3,000	1,000
Z’s Loan A/c			1,66,000	X’s Capital A/c		18,600	31,000
Balance c/d	52,400	2,21,600
	1,10,000	2,33,600	3,36,000		1,10,000	2,33,600	3,36,000

Balance Sheet as at April 01, 2016
Liabilities		Amount Rs	Assets		Amount Rs
Capital A/cs:			Investments		46,000
X	52,400		Land and Building	2,50,000
Y	2,21,600	2,74,000	Add: Undervaluation	20,000	2,70,000
Z’s Loan		1,66,000	Stock	80,000
Workmen Compensation Claim		8,000	Less: Overvaluation	38,000	42,000
Employees Provident Fund		60,000	Debtors	3,00,000
Sundry Creditors	3,00,000		Less: Prov. For D/D	15,000	2,85,000
Less: Written-off	30,000	2,70,000	Bank (2,96,000 – 1,66,000)		1,30,000
			Prepaid Insurance		5,000
		7,78,000			7,78,000

Z’s Loan Account
Dr.						Cr.
Date	Particulars	Amount Rs	Date	Particulars	Amount Rs
2016			2015
March 31	Bank A/c (83,000 + 16,600)	99,600	April 01	Z’s Capital A/c	1,66,000
March 31	Balance c/d	83,000	2016
			March 31	Interest A/c (1,66,000 @ 10%)	16,600
		1,82,600			1,82,600
2017			2016
March 31	Bank A/c (83,000 + 8,300)	91,300	April 01	Balance b/d	83,000
			2016
			March 31	Interest A/c (83,000 @ 10%)	8,300
		91,300			91,300

Working Notes:

WN 1: Calculation of sacrificing/gaining ratio

WN 2: Calculation of goodwill

Answer:

Partners’ Capital Accounts

Dr.

Cr.

Particulars

X

Double Entry Book Keeping Ts Grewal 2017 for Class 12 Commerce Accountancy Chapter 4 - Retirement And Death Of A Partner

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