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# Following is the Balance Sheet Of A And B, Who Shared Profits and Losses in the Ratio of 2 : 1, as at 1st April, 2019: - CBSE (Arts) Class 12 - Accountancy

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ConceptRetirement and Death of a Partner - Calculation of New Profit Sharing Ratio

#### Question

Following is the Balance Sheet of A and B, who shared Profits and Losses in the ratio of 2 : 1, as at 1st April, 2019:

BALANCE SHEET OF A AND B

as on 1st April, 2019

 Liabilities Amount(₹) Assets Amount (₹) Capital A/cs: Land ad Building 2,90,000 A 3,00,000 Furniture 80,000 B 2,00,000 5,00,000 Stock 2,40,000 Reserve 1,50,000 Debtors 1,50,000 Creditors 2,00,000 Bank 60,000 Cash 30,000 8,50,000 8,50,000

On the above date, the partners changed their profit-sharing ratio to 3 : 2. For this purpose, the goodwill of the firm was valued at ₹ 3,00,000. The partners also agreed for the following:
(a) The value of Land and Building will be ₹ 5,00,000;
(b) Reserve is to be maintained at ₹ 3,00,000.
(c) The total capital of the partners in the new firm will be ₹ 6,00,000, which will be shared by the partners in their new profit-sharing ratio.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.

#### Solution

Revaluation Account

 Dr. Cr. Particulars Amount (₹) Particulars Amount (₹) Revaluation Profit Land and Building 2,10,000 A’s Capital A/c 1,40,000 B’s Capital A/c 70,000 2,10,000 2,10,000 2,10,000

Partners’ Capital Accounts

 Particulars A B Particulars A B Reserve 1,80,000 1,20,000 Balance b/d 3,00,000 2,00,000 Cash A/c (bal.fig.) 20,000 Reserve 1,00,000 50,000 A’s Capital 20,000 B’s Capital A/c 20,000 Balance c/d 3,60,000 2,40,000 Revaluation A/c 1,40,000 70,000 Cash A/c (bal.fig.) 60,000 5,60,000 3,80,000 5,60,000 3,80,000

Balance Sheet

 Liabilities Amount (₹) Assets Amount (₹) Capital A/c Land and Building 5,00,000 A 3,60,000 Furniture 80,000 B 2,40,000 6,00,000 Stock 2,40,000 Reserve 3,00,000 Debtors 1,50,000 Creditors 2,00,000 Bank 60,000 Cash (30,000 + 60,000 – 20,000) 70,000 11,00,000 11,00,000

Working Notes

WN1: Calculation of New Capital

WN2: Calculation of Gaining/Sacrificing Ratio& Adjustment for Goodwill

Adjustment for Goodwill

 B’s Capital A/c Dr. 20,000 To A’s Capital A/c 20,000 (B will compensate A to the extent of his gain)
Is there an error in this question or solution?

#### APPEARS IN

Solution Following is the Balance Sheet Of A And B, Who Shared Profits and Losses in the Ratio of 2 : 1, as at 1st April, 2019: Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio.
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