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Q 29 Change in the Profit Sharing Ratio;TS Grewal's ;Solution with Explanation
1. ACCOUNTANCY
CLASS-XII
SOLUTION WITH EXPLANATION
By Geeta Handa
BOOK : Double Entry Book Keeping T.S.GREWAL’S
Partnership-Change in Profit-Sharing Ratio
Question No. 29 Partners : Suresh; Ramesh;
Mahesh and Ganesh
Geeta Handa
2. Geeta Handa
PGT Accountancy
• 20 years experience of teaching
accountancy.
• 14 years experience of checking
accountancy papers of CBSE
• Worked as examiner for conducting
practical exam of accountancy.
geet7handa@gmail.com Geeta Handa
3. Q29 Suresh, Ramesh, Mahesh and Ganesh were partners sharing profits in the ratio of 2 : 2 : 3 : 3.
On 1st April,2016, their Balance Sheet was as follows:
Liabilities Rs. Assets Rs.
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
Geeta Handa
From the above date, the partners decided to share the future profits equally. For this purpose the goodwill
of the firm was valued at Rs.90,000. It was also agreed that :
(a) Claim against Workmen Compensation Reserve will be estimated at Rs.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 Reconstituted firm.
6. Particulars Rs. Particulars Rs.
To Workman Compensation Claim A/c 25,000
To Fixed Assets A/c * 60,000
85,000
Revaluation AccountDr. Cr.
Geeta Handa
*Depreciation on fixed Assets : 6,00,000 X 10/100 = 60,000
7. Particulars Rs. Particulars Rs.
To Workman Compensation Claim A/c 25,000 By Loss transferred to:
( Balance Amount )
85,000
To Fixed Assets A/c 60,000
85,000 85,000
Revaluation AccountDr. Cr.
Geeta Handa
8. Geeta Handa
Rough work
Share of Loss of each partner ( old ratio 2 : 2 : 3 : 3)
Suresh => 85,000 X
2
10
=17,000
Ramesh => 85,000 X
2
10
=17,000
Mahesh => 85,000 X
3
10
=25,500
Ganesh => 85,000 X
3
10
=25,500
9. Particulars Rs. Particulars Rs.
To Workman Compensation Claim A/c 25,000 By Loss transferred to:
To Fixed Assets A/c 60,000 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
Revaluation AccountDr. Cr.
Geeta Handa
13. Geeta Handa
Calculation of Sacrifice / Gain of each Partner:
Partners Suresh Ramesh Mahesh Ganesh
Old Share 𝟐
𝟏𝟎
𝟐
𝟏𝟎
𝟑
𝟏𝟎
𝟑
𝟏𝟎
New Share 𝟏
𝟒
𝟏
𝟒
𝟏
𝟒
𝟏
𝟒
Sacrifice/Gain
Old Share ─ New Share
𝟐
𝟏𝟎
─
𝟏
𝟒
𝟐
𝟏𝟎
─
𝟏
𝟒
𝟑
𝟏𝟎
─
𝟏
𝟒
𝟑
𝟏𝟎
─
𝟏
𝟒
=
𝟖−𝟏𝟎
𝟒𝟎
=
𝟖−𝟏𝟎
𝟒𝟎
𝟏𝟐−𝟏𝟎
𝟒𝟎
𝟏𝟐−𝟏𝟎
𝟒𝟎
= ─ 2/40
Gain
= ─ 2/40
Gain
= 2/40
Sacrifice
= 2/40
Sacrifice
14. Geeta Handa
Calculation of Amount of Compensation for Goodwill:
Partners Suresh Ramesh Mahesh Ganesh
Sacrifice/Gain = ─ 2/40
Gain
= ─ 2/40
Gain
= 2/40
Sacrifice
= 2/40
Sacrifice
Adjustment of
Goodwill of Rs.90,000 90,000 X
𝟐
𝟒𝟎
90,000 X
𝟐
𝟒𝟎
90,000 X
𝟐
𝟒𝟎
90,000 X
𝟐
𝟒𝟎
= 4,500
Dr.
= 4,500
Dr.
= 4,500
Cr.
= 4,500
Cr.
17. Geeta Handa
Total Capital of the New firm after Adjustments :
Suresh 1,00,000 ─17,000 ─ 4,500 = 78,500
Ramesh 1,50,000 ─17,000 ─ 4,500 = + 1,28,500
Mahesh 2,00,000 + 4,500 ─25,500 = + 1,79,000
Ganesh 2,50,000 + 4,500 ─25,500 = +2,29,000
Total Capital of New/Reconstituted Firm = 6,15,000
18. Geeta Handa
Capital of the Partners in the New firm :
( According to New Profit Sharing Ratio 1 : 1 : 1 : 1 )
Suresh …….. ……………………… 6,15,000 X 1
4 = 1,53,750
Ramesh …………………………….. 6,15,000 X 1
4 = 1,53,750
Mahesh…………………………….. 6,15,000 X 1
4 = 1,53,750
Ganesh ……………………………… 6,15,000 X 1
4 = 1,53,750
Total Capital of New/Reconstituted Firm = 6,15,000
24. Balance Sheet of Reconstituted Firm
as at 1st April, 2020
Liabilities Rs. Assets Rs.
Capital A/cs :
Suresh 1,53,750
Ramesh 1,53,750
Mahesh 1,53,750
Ganesh 1,53,750 6,15,000
Geeta Handa
25. Balance Sheet of Reconstituted Firm
as at 1st April, 2020
Liabilities Rs. Assets Rs.
Capital A/cs :
Suresh 1,53,750
Ramesh 1,53,750
Mahesh 1,53,750
Ganesh 1,53,750 6,15,000
Sundry Creditors 1,70,000
Workmen Compensation Claim 1,00,000
8,85,000
Geeta Handa
26. Balance Sheet of Reconstituted Firm
as at 1st April, 2020
Liabilities Rs. Assets Rs.
Capital A/cs : Fixed Assets 5,40,000
Suresh 1,53,750
Ramesh 1,53,750
Mahesh 1,53,750
Ganesh 1,53,750 6,15,000
Sundry Creditors 1,70,000
Workmen Compensation Claim 1,00,000
8,85,000
Geeta Handa
27. Geeta Handa
Working Note : 3
Change in the Value of Current Assets
Value of Current Assets given in Question = 3,45,000
Cash Brought by Suresh + 75,250
Cash Brought by Ramesh + 25,250
Cash Paid to Mahesh ─ 25,250
Cash Paid to Ganesh ─ 75,250
Value of Current Assets in New Balance Sheet =3,45,000
28. Balance Sheet of Reconstituted Firm
as at 1st April, 2020
Liabilities Rs. Assets Rs.
Capital A/cs : Fixed Assets 5,40,000
Suresh 1,53,750 Current Assets 3,45,000
Ramesh 1,53,750
Mahesh 1,53,750
Ganesh 1,53,750 6,15,000
Sundry Creditors 1,70,000
Workmen Compensation Claim 1,00,000
8,85,000 8,85,000
Geeta Handa
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