From the above date partners decided to share the future profits in 3:1:2:4 ratio. For
this purpose the goodwill of the firm was valued at * 90,000. The partners also agreed for
the following:
(i) The claim for workmen compensation has been estimated at * 70,000.
(ii) To adjust the capitals of the partners according to new profit-sharing ratio by opening
Partners' Current Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the
reconsituted firm.
(Delhi 2017)
Answers
ACCOUNTANCY
A,B,C and D were partners in firm sharing profits in the ratio of 3:2:3:2. On 1/4/2016, their Balance Sheet was as follows:
Balance Sheet of A, B, C and D
as on 1/4/2016
Liabilities
Amount
(Rs) Assets Amount
(Rs)
Capital:
A 2,00,000
B 2,50,000
C 2,50,000
D 3,10,000
10,10,000 Fixed Assets
Current Assets
8,25,000
3,00,000
Sundary Creditors 90,000
Workmen Compensation Reserve 25,000
11,25,000 11,25,000
From the above date partners decided to share the future profits in the ratio of 4:3:2:1. For this purpose the goodwill of the firm was valued at Rs.2,70,000. It was also considered that:
(i) The claims against Workmaen compensation Reserve has extimated at Rs.30,000 and fixed assets will be depreciated by Rs.25,000.
(ii) adjust the capitals of the partners according to the new profit sharing ratio by opening current Accounts of the partners.
Prepare Revalution Account, Partner's Capital Accounts and Balance Sheet of the reconstituted firm.
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ANSWER
Working Notes 1:
3:2:3:24:3:2:1
S/R of A= Old Ratio - New Ratio =
10
3
−
10
4
=−
10
1
⇒ Gaining
S/R of B= Old Ratio - New Ratio =
10
2
−
10
3
=−
10
1
⇒ Gaining
S/R of C= Old Ratio - New Ratio =
10
3
−
10
2
=
10
1
⇒ Sacrificing
S/R of D= Old Ratio - New Ratio =
10
2
−
10
1
=
10
1
⇒ Sacrificing
A's Capital A/c Dr. 27,000
B's Capital A/c Dr. 27,000
To C's Capital A/c 27,000
To D's Capital A/c
(Gaining partners compensate sacrificing partners) 27,000
Working Notes 2:
Calculation of Adjusted Capital
A=2,00,000−36,000=Rs.1,64,000
B=2,50,000−33,000=Rs.2,17,000
C=2,77,000−9,000=Rs.2,68,000
D=3,37,000−6,000=Rs.3,31,000
Total Combined Capital =Rs.9,80,000
Working Notes 3:
A=9,80,000×
10
4
=3,92,000
B=9,80,000×
10
3
=2,94,000
C=9,80,000×
10
2
=1,96,000
D=9,80,000×
10
1
=98,000
solution