Question

H-3
X and Y are partners in a firm share profits and losses in the ratio of 5:3. On 31st
March, 2020, their Balance Sheet was as under:
Liabilities
2
Assets
₹
Creditors
50,000 Bank
29,000
Provident Fund
15,000 Debtors
1,80,000
Workmen Compensation Fund
40,000 Stock
1,25,000
Capitals A/C:
Premises
1,50,000
Х
2,60,000
Advertisement Expenses
16,000
Y
1,35,000 3.95,000
5,00,000
5,00,000
On the above date Z is admitted as a partner. x surrendersth of his share and Y
surrenders rd of his share in favour of Z. Goodwill is valued at #1,60,000. Z brings
is only th of his share of goodwill in cash and 1,50,000 as his capital. Following
terms are agreed upon :
(i) Premises is to be increased to 2,00,000 and Stock by 5,000.
Creditors proved at 60,000, one bill for goods purchased having been omitted
from the books.
Outstanding rent amounted to 12,000 and prepaid salaries 2,000.
(iv) Liability on account of provident fund was only 10,000,
(v) Liability of Workmen's Compensation Fund was 16,000.
Prepare Revaluation A/C, Capital A/c and the Opening Balance Sheet. Also calculate
the new profit sharing ratios.

Answer 1

Answer:

Explanation:

 REVALUATION ACCOUNT

Dr.                                                                                                                     Cr.

Particulars Amount  Particulars  Amount  

To Employee provident fund a/c 5000  By Provision for D/d /ac 600  

To Fixed Assets a/c 10000  By L transferred to:

- X's Capital a/c

- Y's Capital a/c  

11500

6900

To Stock a/c 3000      

To Creditors a/c 1000      

 19000   19000  

                                 PARTNER'S CAPITAL A/C

Dr.                                                                                                                 Cr.

Particulars X  Y  Z  Particulars  X  Y  Z  

To Revaluation a/c  11500  6900    By Balance b/d 70000  31000    

To Profit and loss a/c 1500  900    By Cash a/c     20000  

To Balance c/d 72625  25375  20000  By Workmen Compensation Fund a/c 3625  2175    

     By Premium for Goodwill a/c 12000      

 85625  33175 20000    85625 33175 20000  

                                     BALANCE SHEET

Liabilities         Amount       Assets               Amount  

Capital a/cs:

- X

- Y

- Z  

72625

25375

20000                Cash at Bank(5000+20000+12000)  37000

Creditors 16000  Debtors

20000  

Provident Fund

15000  Fixed Assets 70000  

   Stock (25000-3000) 22000  

   

 149000                                   149000

Working Note:

Calculation of New profit sharing ratio:

Old ratio= 5:3

Z is admitted for 1/8th share

Z acquired entire share from X.

X's new share= 5/8-1/8

                      = 4/8

New profit sharing ratio= 4:3:1