Question

The Balance Sheet of Madhu and Vidhi who are sharing profits in the ratio of 2 : 3 as at 31st March, 2016 is given below:
Madhu and Vidhi decided to admit Gayatri as a new partner from 1st April, 2016 and their new profit-sharing ratio will be 2 : 3 : 5. Gayatri brought ₹ 4,00,000 as her capital and her share of goodwill premium in cash.
(a) Goodwill of the firm was valued at ₹ 3,00,000.
(b) Land and Building was found undervalued by ₹ 26,000.
(c) Provision for doubtful debts was to be made equal to 5% of the debtors.
(d) There was a claim of ₹ 6,000 on account of workmen compensation.
Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of the reconstituted firm.

Answer 1

The Revaluation Account, Partners Capital Accounts and the Balance Sheet of the reconstituted firm are calculated below:

Explanation:

Given,

Madhu and Vidhi sharing profits in the ratio of 2 : 3

Their new profit-sharing ratio will be 2 : 3 : 5 after Gayatri became a partner.

Calculation of Gayatri's Share of Goodwill

Gayatri's share

$=3,00,000 \times \frac{5}{10}=1,50,000(\text { to be shared in } 2: 3)$

Calculation of Sacrificing Ratio

The sacrificing ratio is calculated using the following formula

Sacrificing Ratio = Old Ratio - New Ratio

Madhu

$=\frac{2}{5}-\frac{2}{10}=\frac{2}{10}$

Vidhi

$=\frac{3}{5}-\frac{3}{10}=-\frac{3}{10}$