Question

A and B are partners in a firm. The net profit of the firm is divided as follows: 1/2 to A, 1/3 to B and 1/6 carried to a Reserve. They admit C as a partner on 1st April, 2018 on which date, the Balance Sheet of the firm was:
Following are the required adjustments on admission of C:
(a) C brings in ₹ 25,000 towards his capital.
(b) C also brings in ₹ 5,000 for 1/5 th share of goodwill.
(c) Stock is undervalued by 10%.
(d) Creditors include a contingent liability of ₹ 4,000, which has been decided by the court at ₹ 3,200.
(e) In regard to the Debtors , the following Debts proved Bad or Doubtful
₹ 2,000 due from X bad to the full extent.
₹ 4,000 due from insolvent, estate expected to pay only 50%.
You are required to prepare Revaluation Account, Partners Capital Accounts and Balance Sheet of the new firm.

Answer 1

Answer:

A and B are partners in a firm.

A company's balance sheet, also known as a "statement of financial position," reveals the firm's assets, liabilities and owners' equity (net worth). The balance sheet, together with the income statement and cash flow statement, make up the cornerstone of any company's financial statements.

Answer 2

The Revaluation Account, Partners Capital Accounts and Balance Sheet of the new firm are prepared below

Explanation:

Given,

The net profit of the firm is divided as 1/2 to A, 1/3 to B and 1/6 carried to a Reserve.

Calculation of sacrificing ratio

Old Ratio A and B

$=\frac{1}{2}: \frac{1}{3}=3: 2$

Sacrificing Ratio

$(A \text { and } B)=3: 2$

Distribution of Reserve

A's Reserve

$=10,000 \times \frac{3}{5}=6,000$

B's Reserve

$=10,000 \times \frac{2}{5}=4,000$

Distribution of premium for Goodwill

A's premium for Goodwill

$=5,000 \times \frac{3}{5}=3,000$

B's premium for Goodwill

$=5,000 \times \frac{2}{5}=2,000$