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Solution - Mohan and Mahesh Were Partners in a Firm Sharing Profit in the Ratio 3:2. on 1st April, 2012 They Admitted Nusrat as a Partners in the Firm. the Balance Sheet of Mohan and Mahesh on that Date Was as Under - CBSE (Arts) Class 12 - Accountancy

Question

Mohan and Mahesh were partners in a firm sharing profit in the ratio 3:2. On 1st April 2012, they admitted Nusrat as a partner in the firm. The Balance Sheet of Mohan and Mahesh on that date was as under:

Balance Sheet of Mohan and Mahesh as on 1st April 2012

Liabilities Amount(Rs.) Assets Amount(Rs.)

Creditors

Workman’s Compensation Fund

General Reserve

Capital:

       Mohan                     1,00,000

       Mahesh                       80,000

 

2,10,000

2,50,000

1,60,000

 

 

1,80,000

 

Cash in hand

Debtors

Stock

Machinery

Building

 

 

1,40,000

1,60,000

1,20,000

1,00,000

2,80,000

 

 

  8,00,000   8,00,000

It was agreed that:

i. The value of Building and Stock be appreciated to Rs.3,80,000 and Rs.1,60,000 respectively.

ii. The liabilities of workmen's compensation fund was determined at Rs.2,30,000.

iii. Nusrat brought in her share of goodwill Rs.1,00,000 in cash.

iv. Nusrat was to bring further cash as would make her capital equal to 20% of the combined capital of Mohan and Mahesh after above revaluation and adjustments are carried out.

v. The future profit sharing ratio will be Mohan 2/5, Mahesh 2/5, Nusrat 1/5.

Prepare Revaluation Account, Partner's Capital Accounts and Balance Sheet of the new firm. Also show clearly the calculation of Capital brought by Nusrat.

Solution

Revaluation Account
Dr.   Cr.
Particulars Amount(Rs.) Particulars Amount(Rs.)

To Revaluation Profit

     Mohan’s Capital A/c              84,000

     Mahesh’s Capital A/c             56,000  

 

 

 

1,40,000

 

By Building A/c

By Stock A/c

 

 

 

 

1,00,000

40,000

 

 

 

 

  1,40,000   1,40,000

 

Partners’ Capital Account
Particulars Mohan Mahesh Nusrat Particulars Mohan Mahesh Nusrat

To Balance c/d

 

 

 

 

 

 

3,92,000

 

 

 

 

 

 

2,08,000

 

 

 

 

 

 

1,20,000

 

 

 

 

 

 

By Balance b/d

By Cash A/c

By General Reserve A/c

By Workman Comp. Fund A/c

By Revaluation A/c

By Premium for Goodwill A/c

 

1,00,000

 

96,000

12,000

84,000

1,00,000

 

80,000

 

64,000

8,000

56,000

 

 

 

1,20,000

 

 

 

 

 

  3,92,000 2,08,000 1,20,000   3,92,000 2,08,000 1,20,000

           

Balance Sheet
As on April 01, 2012 after Nusrat's admission

Liabilities Amount (Rs.) Assets Amount (Rs.)

Creditors A/c

Capital A/c:

     Mohan            3,92,000

     Mahesh           2,08,000

     Nusrat            1,20,000   

Liability for Workman Compensation

 

2,10,000

 

 

 

7,20,000

2,30,000

 

Cash in Hand A/c  (1,40,000+1,20,000+1,00,000)

Debtors

Stock

Machinery

Building

 

 

3,60,000

1,60,000

1,60,000

1,00,000

3,80,000

 

 

  11,60,000   11,60,000

Working Note:

WN 1: Calculation of Sacrificing Ratio

Sacrificing Ratio= Old Ratio –New Ratio

Mohan = (3/5) - (2/5) = 1/5

Mahesh = (2/5) - (2/5) = 0

As in this case, the entire sacrifice has been made by Mohan, so the entire goodwill of its 1,00,000 is credited to his Capital A/c

WN 2: Calculation of Nusrat's Capital

Adjusted Capital of A = 3,92,000

Adjusted Capital of B = 2,08,000

Total Adjusted Capital = 6,00,000 (3,92,000+2.08,000)

Nusrat brings 20% of the total adjusted capital i.e. its 1,20,000 (20% of 6,00,000)

Is there an error in this question or solution?

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Solution for question: Mohan and Mahesh Were Partners in a Firm Sharing Profit in the Ratio 3:2. on 1st April, 2012 They Admitted Nusrat as a Partners in the Firm. the Balance Sheet of Mohan and Mahesh on that Date Was as Under concept: Preparation of Revaluation Account and Balance Sheet. For the courses CBSE (Arts), CBSE (Commerce)
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