Mohan and Mahesh were partners in a firm sharing profits in the ratio of 3:2. On 31st April,2012 they admitted Nusrat as a partner in a firm. The balance sheet of Mohan and Mahesh on that date was as under:
It was agreed that :
(1) the value of building and stock be appreciated to Rs 3,80,000 and Rs 1,60,000 respectively.
(2) the liability of workmen's compensation fund was determined at Rs 2,30,000
(3) Nusrat brought in her share of goodwill Rs 1,00,000 in cash.
(4) Nusrat was to bring further cash as would make her capital equal to 20% of the combined capital of Mohan and Mahesh after above revaluation and adjustments are carried out.
(5) The future profit sharing ratio will be Mohan 2/5th, Mahesh 2/5th, Nusrat 1/5th.
Prepare Revaluation account, Partners Capital accounts and Balance Sheet of the new firm. also show clearly the calculation of capital brought by Nusrat.
[Ans; Profit on Revaluation Rs 1,40,000; Capital Accounts : Mohan Rs 3,92,000; Mahesh Rs 2,08,000; Nusrat Rs 1,20,000, B/S Total Rs 11,60,000]
Hint ; Whole sacrifice is made by Mohan,
Dear Student
Regards
| Revalution A/c | |||||
| Date | Particulars | Amount (in Rs) | Date | Particulars | Amount (in Rs) |
| Building | 100,000 | ||||
| Stock | 40,000 | ||||
| Capital A/c | |||||
| Mohan (1,40,000 x 3/5) | 84,000 | ||||
| Mahesh (1,40,000 x 2/5) | 56,000 | ||||
| 140,000 | 140,000 | ||||
| Partner's Capital A/c | |||||||
| Particulars | Mohan's Capital A/c | Mahesh's Capital A/c | Nusrat's Capital A/c | Particulars | Mohan's Capital A/c | Mahesh's Capital A/c | Nusrat's Capital A/c |
| Balance b/d | 100,000 | 80,000 | |||||
| Cash | 120,000 | ||||||
| Premium for Goodwill A/c | 100,000 | ||||||
| Revaluation A/c | 84,000 | 56,000 | |||||
| Workmen Compensation Reserve | 12,000 | 8,000 | |||||
| Bal C/d | 392,000 | 208,000 | 120,000 | General Reserve | 96,000 | 64,000 | |
| 392,000 | 208,000 | 120,000 | 392,000 | 208,000 | 120,000 | ||
| Balancesheet | |||
| Liabilities | Amount (in Rs) | Assets | Amount (in Rs) |
| Workmen Compensation Liability | 230,000 | Land and Building | 380,000 |
| Creditors | 210,000 | Stock | 160,000 |
| Machinery | 100,000 | ||
| Debtors | 160,000 | ||
| Capital | Cash | 360,000 | |
| Mohan | 392,000 | ||
| Mahesh | 208,000 | ||
| Nusrat | 120,000 | ||
| 1,160,000 | 1,160,000 | ||
| Calculation of Sacrificing and Gaining Partners | |||
| Mohan | Mahesh | Nusrat | |
| Old Ratio | 3/5 | 2/5 | 0 |
| Less : New Ratio | 2/5 | 2/5 | 1/5 |
| 1/5 | 0 | - 1/5 | |
| Sacrificing | Gaining | ||
| Goodwill Adjustment | ||
| Sacrificing Ratio | Only mohan is sacrificing | |
| Share of Goodwill of Nusrat | 100,000 | |
| Distribution in Sacrificing Ratio | ||
| Mohan's Capital A/c | 100,000 |
| Capital Adjustment | ||
| Combined share of Mohan and Mahesh | 4/5 | |
| Combined Capital of Mohan and Mahesh after adjustments | 600,000 | |
| Nusrat's capital = 20% of Combined Capital | (6,00,000 x 20/100) | 120,000 |
Regards