5.66 Double Entry Book Keeping-CBSE A
3:2. On Ist Ar
Illustration 56 (Adjustment of Capital by Opening Current Accounts).
Charu and Harsha were partners in a firm sharing profits in the ratio of 3.
2014, their Balance Sheet was as follows:
Workin
1. All
cre
Assets
Liabilities
Sir
General Reserve
Wonimen Compensation Fund
investment Fluctuation Fund
Provision for Bad Debts
Capital A/c Charu
Harsha
17.000
4.000
9,000
11,000
2000
Cash
Debtors
Investments
Plant
Land and Building
30,000
20,000
3.
50,000
93,000
On the above date Vaishali was admitted for 1/4th share in the profits of the firm
following terms
Vaishali will bring 20,000 for her capital and 4,000 for her share of goodwill premi
1) All debtors were considered good.
- The market value of investments was 15,000.
(iv) There was a liability of 6,000 for Workmen Compensation.
(v) Capital Accounts of Charu and Harsha are to be adjusted on the basis of Vaishal
capital by opening Current Accounts.
Prepare Revaluation Account and Partners' Capital Accounts.
Solution:
(Delhi 2
DALAT
Answers
Answer:
Working Notes:
Calculation of new profit sharing ratio:
Old profit sharing ratio = 3:2
Vaishali is admitted for 1/4th share.
Hence profit share available to old partners are 1-1/4=3/4
Charu’s new profit share= 3/5*3/4=9/20
Harsha’s new profit share = 2/5*3/4=6/20
Vaishali’s =1/4=5/20
Hence new profit sharing ratio= 9:6:5
Calculation of sacrificing ratio:
Old Ratio= 3:2
New ratio=9:6:5
Hence sacrificing ratio= old ratio – new ratio
Charu’s =3/5-9/20=3/20
Harsha’s =2/5-6/20=2/20
Sacrificing ratio= 3:2
Distribution of goodwill:
Goodwill brought in =Rs 4,000
Charu’s share =4,000*3/5=2,400 Rs
Harsha’s share = 4000*2/5=1600 Rs
Adjustment of Capital:
Total capital of the firm = Capitalising Vaishali’s capital
=20,000*4/1 = Rs 80,000
New profit sharing Ratio = 9:6:5
Charu’s new capital =80000*9/20=36,000 Rs
Harsha’s new capital = 80,000*6/20= 24,000 Rs
Vaishali’s new capital = 20,000 Rs
Working Notes:
Calculation of new profit sharing ratio:
Old profit sharing ratio = 3:2
Vaishali is admitted for 1/4th share.
Hence profit share available to old partners are
1-1/4=3/4
Charu’s new profit share= 3/5*3/4=9/20
Harsha’s new profit share = 2/5*3/4=6/20
Vaishali’s =1/4=5/20
Hence new profit sharing ratio= 9:6:5
Calculation of sacrificing ratio:
Old Ratio= 3:2
New ratio=9:6:5
Hence sacrificing ratio= old ratio – new ratio
Charu’s =3/5-9/20=3/20
Harsha’s =2/5-6/20=2/20
Sacrificing ratio= 3:2
Distribution of goodwill:
Goodwill brought in =Rs 4,000
Charu’s share =4,000*3/5=2,400 Rs
Harsha’s share = 4000*2/5=1600 Rs
Adjustment of Capital:Total capital of the firm = Capitalising Vaishali’s capital =20,000*4/1 = Rs 80,000
New profit sharing Ratio = 9:6:5
Charu’s new capital =80000*9/20=36,000 Rs
Harsha’s new capital = 80,000*6/20= 24,000 Rs
Vaishali’s new capital = 20,000 Rs