Question

Kalpana and Kanika were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2018, they admitted Karuna as a new partner for 1/5th share in the profits of the firm. The Balance Sheet of the Kalpana and Kanika as on 1st April, 2018 was as follows:
It was agreed that;
(a) the value of Land and Building will be appreciated by 20%.
(b) the value of plant be increased by ₹ 60,000.
(c) Karuna will bring ₹ 80,000 for her share of goodwill premium.
(d) the liabilities of Workmen’s Compensation Fund were determined at ₹ 60,000.
(e) Karuna will bring in cash as capital to the extent of 1/5th share of the total capital of the new firm.
Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet of the new firm.

Answer 1

Explanation:

Working Notes:

Working Notes 1:

Calculation of New Share

Karuna is admitted for $1 / 5 t h$ Share

Let the total share of the firm be 1

Remaining share = $1-\frac{1}{5}=\frac{4}{5}$

This remaining share will be shared among old partners in their old ratio i.e. 3 : 2

Kalpana's Share =  $\frac{4}{5} \times \frac{3}{5}=\frac{12}{25}$

Kanika's Share =  $\frac{4}{5} \times \frac{2}{5}=\frac{8}{25}$

New Ratio = $12: 8: 5$

Calculation of Sacrificing Ratio

Sacrificing Ratio = Old Ratio - New Ratio

Kalpana = $\frac{3}{5}-\frac{12}{25}=\frac{3}{25}$

Kanika = $\frac{2}{5}-\frac{8}{25}=\frac{2}{25}$

Sacrificing Ratio = $3: 2$

Working Notes 2:

Adjusted Capital of Kalpana = $6.49,200$

Adjusted Capital of kanika = $3,22,800$

Total Adjusted Capital = $9,72,000(6,49,200+3,22,800)$

Karuna's Capital = Adjusted Capital of Kalpana and Kanika × Karfuna's Share × Reciprocal of the Firm's Share

Karuna's Capital = $9,72,000 \times \frac{1}{5} \times \frac{5}{4}$ $=\mathrm{Rs} 2,43,000$