Question

Amay and Sujoy are partners sharing profits and losses in the ratio of 3 : 1. Their Balance Sheet as at 31st March, 2023, is given below.

Balance Sheet of Amay and Sujoy As at 31st March, 2023
Liabilities	(₹)	(₹)	Assets	(₹)	(₹)
Bills Payable		70,000	Land and Building		1,65,000
Capital Accounts:		2,55,000	Stock		60,000
Amay	1,30,000		Sundry Debtors	70,000	60,000
Sujoy	1,25,000		Less: Provision for Doubtful debts	(10,000)
			Cash in hand		40,000
		3,25,000			3,25,000

On 1st April, 2023, they admit Malay as a new partner for `1/4` share in the profits on the following terms:

1. Malay is to bring his share of capital of ₹ 1,20,000 and to pay ₹ 10,000 in cash for his share of goodwill.
2. Stock worth ₹ 45,000 is to be taken over by Amay at ₹ 25,000.
3. Bills Payable of ₹ 20,000 to be honoured by Sujoy, for which he is not to be reimbursed.
4. The capitals of Amay and Sujoy are to be adjusted on the basis of Malay’s Capital and his share in the profits, any surplus to be readjusted through the current account and deficiency through cash.

You are required to prepare the Partners’ Capital Accounts.

Answer 1

Dr.	Revaluation Account		Cr.
Particulars	Amt (₹)	Particulars	Amt (₹)
To Stock A/c	20,000	By Bills Payable A/c	20,000
	20,000		20,000

 

Dr.	Partner’s Capital Account						Cr.
Particulars	Amay	Sujoy	Malay	Particulars	Amay	Sujoy	Malay
To Stock A/c	25,000			By Balance b/d	1,30,000	1,25,000
To Balance c/d	1,12,500	1,27,500	1,20,000	By Cash A/c			1,20,000
				By Premium for Goodwill A/c	7,500	2,500
	1,37,500	1,27,500	1,20,000		1,37,500	1,27,500	1,20,000
To Sujoy’s current A/c		37,500		By Balance b/d	1,12,500	1,27,500	1,20,000
To Balance c/d	2,70,000	90,000	1,20,000	By Cash A/c	1,57,500
	2,70,000	1,27,500	1,20,000		2,70,000	1,27,500	1,20,000

Working Note:

Calculation of New Profit Sharing ratio:

Malay’s shares = `1/4`

Let total share be 1.

Remaining share = `1 - 1/4 = 3/4`

Amay’s share = `3/4 xx 3/4 = 9/16`

Sujoy’s share = `3/4 xx 1/4 = 3/16`

Malay’s share = `1/4 xx 4/4 = 4/16`

New profit sharing ratio = Amay : Sujoy : Malay

= `9/16 : 3/16 : 4/16`

= 9 : 3 : 4

Total capital of new firm based on Malay’s capital = `1,20,000 xx 4/1`

= ₹ 4,80,000

Amay’s new capital = `4,80,000 xx 9/16`

= ₹ 2,70,000

Sujoy’s new capital = `4,80,000 xx 3/16`

= ₹ 90,000