Question

Mohan and Sohan are in partnership sharing profits in the proportion of 3/5th and 2/5th respectively. Their Balance Sheet as at 31st March, 2018 was:
They decide to admit Rohan to a 1/3rd share upon the terms that he is to pay into the business ₹ 1,000 as Goodwill and sufficient Capital to give him a 1/3rd share of the total capital of the new firm. It was agreed that the Provision for Doubtful Debts be reduced to ₹ 100 and the Stock be revalued at ₹ 2,000 and that the Plant be reduced to ₹ 500. You are required to record the above in the Ledger of the firm and show Balance Sheet of the new partnership.

Answer 1

Explanation:

Working Notes:

Working Notes 1:

$\begin{array}{cccc} & \text { Mohan } & : & \text { Sohan } \\\text { Old Ratio } & 3 & : & 2 \\\text { Sacrificing Ratio } & 3 & : & 2\end{array}$

Working Notes 2:

Distribution of Premium for Goodwill

Mohan will get $=1,000 \times \frac{3}{5}=\mathrm{Rs} 600$

Sohan will get $=1,000 \times \frac{2}{5}=R s 400$

Working Notes 3:

Distribution of Revaluation Profit

Mohan's Share $=650 \times \frac{3}{5}=\mathrm{Rs} 390$

Sohan's Share $=650 \times \frac{2}{5}=\mathrm{Rs} 260$

Working Notes 4:

Calculation Robins Capital

Combined Capital of Mohan and Sohan after all the adjustments $=2,990+1,660=\mathrm{Rs} 4,650$

Total Capital of the firm on the basis of Combined Capital of Mohan and Sohan $=4,650 \times \frac{3}{2}=6,975$

Rohan's Capital $=6,975 \times \frac{1}{3}=\mathrm{Rs} 2,325$