Question

X and Y are partners sharing profits and losses in the ratio of 3/4 and 1/4. Their Balance Sheet as at 31st March, 2018 is:
They admit Z into partnership on 1st April, 2018 on the following terms:
(a) Goodwill is to be valued at ₹ 1,00,000.
(b) Stock and Furniture to be reduced by 10%.
(c) A Provision for Doubtful Debts is to be created @ 5% on Sundry Debtors.
(d) The value of Land and Building is to be appreciated by 20%.
(e) Z pays ₹ 50,000 as his capital for 1/5th share in the future profits.
You are required to show Revaluation Account, Partners Capital Accounts and Balance Sheet of the new firm.
Note: Z’s Share of Goodwill ₹ 20,000 (i.e, ₹ 1,00,000 x 1/5 ) can be adjusted through Z’s Current A/c. In that situation, Partners Capital A/cs: X – ₹ 1,87,875; Y – ₹ 92,625; Z – ​₹ 50,000; Z’s Current A/c (Dr.) – ​₹ 20,000; Balance Sheet Total – ₹ 5,18,000.

Answer 1

Answer:

Revaluation of assets: Building ₹ 18,000; Stock ₹ 16,000.

A balance sheet is a financial statement that reports a company's assets, liabilities and shareholders' equity at a specific point in time, and provides a basis for computing rates of return and evaluating its capital structure

Answer 2

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

Explanation:

Given,

X and Y are partners sharing profits and losses in the ratio of 3/4 and 1/4.

Old Ratio and Sacrificing Ratio:

Old Ratio $(\mathrm{X} \text { and } \mathrm{Y})=3: 1$

Sacrificing Ratio ( X and Y ) = 3 : 1

Calculation of Goodwill:

Goodwill of the firm $=1,00,000$

Z's Share of Goodwill

$=1,00,000 \times \frac{1}{5}=20,000$

Z's Share of Goodwill distribution of premium for Goodwill

X's premium for Goodwill

$=20,000 \times \frac{3}{4}=15,000$

Ys premium for Goodwill

$=20,000 \times \frac{1}{4}=5,000$