Question

Greg and Rohit are partners in a firm sharing profits and losses in the ratio of 2 : 3.

Their Balance Sheet as at 31^st March, 2022, is given below:

Balance Sheet of Greg and Rohit As at 31st March, 2022
Liabilities		(₹)	Assets		(₹)
Sundry Creditors		15,000	Goodwill		10,000
Outstanding Salary		5,000	Office Equipment		37,000
General Reserve		8,000	Sundry Debtors	6,400	6,000
Capital Accounts:			Less: Provision for doubtful debts	400
Greg	25,000	35,000	Cash		10,000
Rohit	10,000
		63,000			63,000

On 1^st April, 2022, they admit Kunal as a new partner on the following terms:

1. The new profit-sharing ratio of Greg, Rohit and Kunal is to be 5 : 3 : 2.
2. Kunal to bring his share of capital of ₹ 25,000 and his share of goodwill of ₹ 5,000 in cash.
3. Office Equipment to be valued at ₹ 42,000.

You are required to prepare Partners' Capital Accounts.

Answer 1

Dr.	Partners' Capital Account						Cr.
Particulars	Greg	Rohit	Kunal	Particulars	Greg	Rohit	Kunal
To Goodwill	4,000	6,000	-	By Balance b/d	25,000	10,000	-
To Rohit's Capital A/c	2,500	-	-	By General Reserve	3,200	4,800	-
To Balance b/d	23,700	19,300	25,000	By Bank A/c	-	-	25,000
				By Premium for Goodwill A/c	-	5,000	-
				By Greg's Capital A/c (goodwill)	-	2,500	-
				By Revaluation A/c (Profit)	2,000	3,000	-
	30,200	25,300	25,000		30,200	25,300	25,000

Working Note:

Greg's sacrifice = `2/5 - 5/10 = (4 - 5)/10 = - 1/10` [Gain]

Rohit s Sacrifice = `3/5 - 3/10 = (6 - 3)/10 = 3/10` [Sacrifice]

Kunal's share of goodwill = ₹ 5,000

Kunal's share of profit = `2/10`

Firm's goodwill = `5,000 xx 10/2` = ₹ 25,000

Share of goodwill to be brought in by Greg's = `25,000 xx 1/10` = ₹ 2,500

Profit on revaluation of office Equipments = 42,000 - 37,000 = ₹ 5,000