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# Solution for 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 (Commerce) Class 12 - Accountancy

ConceptPreparation of Revaluation Account and Balance Sheet

#### 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 SheetAs 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?

#### APPEARS IN

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 Concept: Preparation of Revaluation Account and Balance Sheet.
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