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Question
On 31st March, 2019 the Balance Sheet of Madan and Mohan who share profits and losses in the ratio of 3 : 2 was as follows:
| Balance Sheet of Madan and Mohan as at 31st March, 2019 |
|||||
| Liabilities | ₹ | ₹ | Assets | ₹ | ₹ |
| Creditors | 28,000 | Cash at Bank | 10,000 | ||
| General Reserve | 10,000 | Debtors | 65,000 | 60,000 | |
| Employees Provident Fund | 22,000 | Less: Provision for Doubtful Debts | 5,000 | ||
| Capitals: | 1,00,000 | Stock | 33,000 | ||
| Madan | 60,000 | Patents | 57,000 | ||
| Mohan | 40,000 | ||||
| 1,60,000 | 1,60,000 | ||||
They decided to admit Gopal on 1st April, 2019 for `1/5`th share, which Gopal acquired wholly from Mohan on the following terms:
- Gopal shall bring ₹ 10,000 as his share of the premium for Goodwill.
- A debtor whose dues of ₹ 3,000 were written off as bad debt paid ₹ 2,000 in full settlement.
- A claim of ₹ 5,000 on account of workmen’s compensation was to be provided for.
- Patents were undervalued by ₹ 2,000. Stock in the books was valued 10% more than its market value.
- Gopal was to bring in capital equal to 20% of the combined capitals of Madan and Mohan after all adjustments.
Prepare the Revaluation Account, the Capital Accounts of the Partners and the Balance Sheet of the new firm.
Ledger
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Solution
| Dr. | Revaluation Account | Cr. | |||
| Particulars | Amount (₹) | Amount (₹) | Particulars | Amount (₹) | Amount (₹) |
| To Workmen’s Compensation Claim | 5,000 | By Bank A/c (Bad Debts Recovered) |
2,000 | ||
| To Stock | 3,000 | By Patents | 2,000 | ||
| By Loss on Revaluation: | 4,000 | ||||
| Madan’s share | 2,400 | ||||
| Mohan’s share | 1,600 | ||||
| 8,000 | 8,000 | ||||
| Dr. |
Partners’ Capital Accounts
|
Cr. | |||||
| Particulars | Madan (₹) | Mohan (₹) | Gopal (₹) | Particulars | Madan (₹) | Mohan (₹) | Gopal (₹) |
| To Revaluation Loss | 2,400 | 1,600 | By Balance b/d | 60,000 | 40,000 | ||
| To Balance c/d | 63,600 | 52,400 | 23,200 | By General Reserve | 6,000 | 4,000 | |
| By Bank A/c (Goodwill) |
10,000 | ||||||
| By Bank A/c (Capital) |
23,200 | ||||||
| 66,000 | 54,000 | 23,200 | 66,000 | 54,000 | 23,200 | ||
| New Balance Sheet as at 1st April, 2019 | |||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Creditors | 28,000 | Cash at Bank | 45,200 | ||
| Employees Provident Fund | 22,000 | Debtors | 65,000 | 60,000 | |
| Workmen’s Compensation Claim | 5,000 | Less: Provision | 5,000 | ||
| Capitals: | 1,39,200 | Stock | 30,000 | ||
| Madan | 63,600 | Patents | 59,000 | ||
| Mohan | 52,400 | ||||
| Gopal | 23,200 | ||||
| 1,94,200 | 1,94,200 | ||||
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