x and y are partners in a firm sharing profit and losses in the ratio of 5 :3 on 31st March 2018 their balance sheet was as under :

Liabilities

Creditors =50000
Provident fund=15000
Workmen's compensation reserve=40000
Capital account
X = 2,60,000
Y = 1,35,000

Assets
Bank =29000
Debtors =180000
Stock =125000
premises =150000
advertisement expenses=16000


on 1st April 2018 z is admitted as a partner .x surrenders one upon fourth of his share and Y one upon three of his share in favour of Z .Goodwill is valued at 160000 z brings in only 2 upon 5 of his share of goodwill in cash and 150000 as his capital following terms are agreed upon :

1. Premises is to be increased to rupees 200000 and stock by 5000

2. Creditors prove at rupees 60000 one bill for goods purchased having been omitted for the book

3. Outstanding rent amounted to rupees 12000 and prepaid salaries rupees 2000

4. Liability on account of provident fund was only rupees 10,000

5. liability for workmen's compensation claim was rupees 16000

prepare revaluation account capital account and the opening balance sheet also calculate the new profit sharing ratio


Dear Student,
 
Revalution A/c
Date Particulars Amount (in Rs) Date   Particulars Amount (in Rs)
  Creditor 10,000   Premises 50,000
  Outstanding Rent 12,000   Stock 5,000
        Prepaid Salaries 2,000
  Partners Capital A/c     Providend Fund 5,000
  X 25,000      
  Y 15,000      
           
           
           
    62,000     62,000
 
Partner's Capital A/c
Particulars X's Capital A/c Y's Capital A/c Z's Capital A/c Particulars X's Capital A/c Y's Capital A/c Z's Capital A/c
Advertisement Expenses 10,000 6,000   Balance b/d 260,000 135,000  
        Cash     150,000
        Premium for goodwill A/c 10,000 8,000  
        Z's Current A/c 15,000 12,000  
        Revaluation A/c 25,000 15,000  
Bal C/d 315,000 173,000 150,000 WCR 15,000 9,000  
               
               
               
               
  325,000 179,000 150,000   325,000 179,000 150,000
 
                                         Balance    sheet
Liabilities Amount (in Rs) Assets Amount (in Rs)
Creditors 60,000 Debtors 180,000
Provident Fund Liability 10,000 Stock 130,000
Outstanding Liability for workmen claim 16,000 Premises 200,000
Outstanding rent 12,000 Bank 197,000
Capital   Prepaid Salaries 2,000
X 315,000    
Y 173,000 Z's Current A/c 27,000
Z 150,000    
       
       
  736,000   736,000


Calculation of new profit sharing ratio is not provided therein , which would be as follows:
Old Ratio of X & Y is 5:3
X's Sacrifice = 14×58=532
Y's Sacrifice = 13×38=18‚Äč
Thus Z's share = 532+18=932
And sacrificing ratio of X & Y is 532:18 or 5:4
Now Z brings only 25th share of goodwill = 25×1,60,000×932= 18,000
Thus, For remaining  amount that could not be brought in as goodwill , Z's Current A/c would be debited & X & Y's Capital A/c would be credited

Z's Total share of goodwill = 932×1,60,000 = 45,000
Share not brought by Z = 45,000-18,000= 27,000

Hope this helps

Regards,

  • 13
What are you looking for?