Question

Shyamlal and Sanjay were in partnership business sharing profits and losses in the ratio of 2 : 3 respectively. Their Balance Sheet as at 31st March, 2018 was:
On 1st April, 2018, they admitted Shanker into partnership for 1/3rd share in the future profits on the following terms:
(a) Shanker is to bring in ₹ 30,000 as his capital and ₹ 20,000 as goodwill which is to remain in the business.
(b) Stock and Furniture are to be reduced in value by 10%.
(c) Building is to be appreciated by ₹ 15,000.
(d) Provision of 5% is to be made on Sundry Debtors for Doubtful Debts.
(e) Unaccounted Accrued Income of ₹ 2,400 to be provided for. A debtor, whose dues of ₹ 4,800 were written off as bad debts, paid 50% in full settlement.
(f) Outstanding Rent amounted to ₹ 4,800.
Show Profit and Loss Adjustment Account (Revaluation Account), Capital Accounts of Partners and opening Balance Sheet of the new firm.

Answer 1

The Profit and Loss Adjustment Account (Revaluation Account), Capital Accounts of Partners and opening Balance Sheet of the new firm are calculated below:

Explanation:

Given,

Shyamlal and Sanjay were in partnership business sharing profits and losses in the ratio of 2 : 3

They admitted Shanker into partnership for 1/3rd share

Calculation of Premium for Goodwill:

Sacrificing Ratio Shyamlal and Sanjay =2: 3

Premium for Goodwill is to be distributed in Sacrificing ratio.

Shyamlal Premium for Goodwill

$=10,000 \times \frac{2}{5}=4,000$

Sanjay Premium for Goodwill

$=10,000 \times \frac{3}{5}=6,000$

Calculation of Distribution of Profit:

Distribution of Profit from Profit & Loss Adjustment A/c in old ratio

Shyamlal Profit

$=12,485 \times \frac{2}{5}=4,994$

SanjayProfit

$=12,485 \times \frac{3}{5}=7,491$