Question

Que 30. Kale and Lele are in patnership sharing profits and losses in the proportion of 3:1 respectively and having the following Balance Sheet :

Balance Sheet 31-03-2005

Amount Rs.

Assets

Building

Furniture

Stock

Sundry Debtors

Bills Receivable

Bank

Liabilities

Capital:

Kale

Lele

Reserve Fund

Bills Payable

Sundry Creditors

Amount Rs.

50,000

4,000

40,000

40,000

26,000

20,000

1,80,000

60,000

32,000

8,000

15,000

65,000

1,80,000

On 1st April 2005, they admit Rane into the firm on the following terms :

(1) (2) He should be given 1/5 share in the future profit and should bring in Rs. 30,000 as capital. The goodwill of the firm should be valued at Rs. 50,000 and Rane as share should bring in cash.

(3) Furniture and stock should be reduced by 10% and R.D.D. should be created at 5%. (4) Building should be raised by 20%.

(5) The capital accounts of all partners should be adjusted in their profit sharing proportion through bank account. Prepare necessary ledger accountants in the books of firm and Balance Sheet of the new firm (Oct. 2003).​

Answer 1

• Explanation:
• on the following terms :
• (1) (2) He should be given 1/5 share in the future profit and should bring in Rs. 30,000 as capital. The goodwill of the firm should be valued at Rs. 50,000 and Rane as share should bring in cash.

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Answer 2

Answer:

The Balance of capital A/C's Will be -

Kale - 90,000 Rs.

Lale - 30,000 Rs.

Rane - 30,000 Rs.

Explanation:

Working note

1) Distribution of Reserve-

Reserve will be distributed between  old partners in old ratio-

Kale's Share = 8,000 x $\frac{3}{4}$ = 6,000

Lele's Share = 8,000 x $\frac{1}{4}$ = 2,000

2) Calculation of profit Sharing Ratio-

Let total profit be 1.

Rane's Share = $\frac{1}{5}$

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

Sacrificing ration = 3 : 1

Kale's Share = $\frac{4}{5} X \frac{3}{4}$ = $\frac{3}{5}$

Lele's Share = $\frac{4}{5} X \frac{1}{4} = \frac{1}{5}$

New Ratio = 3 : 1 : 1

3) Capital Adjustment-

Rane brings Rs. 30,000 for 1/5 th of his share.

Kale's Capital Required = 90,000 ( For 3/5th part of share)

Lale's Capital Required = 30,000 ( For 1/5th part of share)

We adjust the surplus balance in the bank A/c

4) The credit Balance of Bank account shows an overdraft which is a liability of the business.

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