Question

A and B were partners in a firm sharing profits in 3 : 1 ratio. They admitted C as a partner for 1/4th share in the future profit. C was to bring ₹ 60,000 for his capital. The Balance Sheet of A and B as at 1st April, 2018, the date on which C was admitted, was:
The other terms agreed upon were:
(a) Goodwill of the firm was valued at ₹ 24,000.
(b) Land and Building were valued at ₹ 65,000 and Plant and Machinery at ₹ 60,000.
(c) Provision for Doubtful Debts was found in excess by ₹ 400.
(d) A liability of ₹ 1,200 included in Sundry Creditors was not likely to arise.
(e) The capitals of the partners be adjusted on the basis of C’s contribution of capital to the firm.
(f) Excess of shortfall, if any, be transferred to Current Accounts.
Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet of the new firm.

Answer 1

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

Explanation:

Sacrificing Ratio

Old Ratio $(A \text { and } B)=3: 1$

Sacrifidng Ratio 3: 1

Calculation of Goodwill

C's Goodwill

$=24,000 \times \frac{1}{4}=6,000$

A's Goodwill

$=6,000 \times \frac{3}{4}=4,500$

B's Goodwill

$=6,000 \times \frac{1}{4}=1,500$

Distribution of Revaluation Profit

A's Revaluation Profit

$=16,600 \times \frac{3}{4}=12,450$

B's Revaluation Profit=

$16,600 \times \frac{1}{4}=4,150$

Adjusted Capital

Total Capital of the firm after C's admission

$=60,000 \times 4=2,40,000$

Combined Capital Of A and B = Total Capitel of the firm after C's admission-C's Capital

Combined Capital Of A and B = 2,40,000-60,000

Combined Capital Of A and B =1,80,000

A's Capital

$=1,80,000 \times \frac{3}{4}=1,35,000$

B's Capital

$=1,80,000 \times \frac{1}{4}=45,000$

Answer 2

Answer:

this question won't come in the board exam this year as capital adjustment is deleted from this years syllabus