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Ram, Mohan, Sohan and Hari Were Partners in a Firm Sharing Profits in the Ratio of 4 : 3 : 2 : 1. on 1st April, 2016, Their Balance Sheet Was as Follows: - CBSE (Arts) Class 12 - Accountancy

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Question

Ram, Mohan, Sohan and Hari were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1. On 1st April, 2016, their Balance Sheet was as follows:

BALANCE SHEET OF RAM, MOHAN, SOHAN AND HARI

as on 1st April, 2016

Liabilities Assets
Capital A/cs:   Fixed Assets 9,00,000
 Ram 4,00,000   Current Assets 5,20,000
 Mohan     4,50,000      
 Sohan 2,50,000      
 Hari  2,00,000 13,00,000    
Workmen Compensation Reserve   1,20,000    
    14,20,000   14,20,000


From the above date, the partners decided to share the future profits in the ratio of 1 : 2 : 3 : 4. For this purpose the goodwill of the firm was valued at ₹ 1,80,000. The partners also agreed for the following:(a) The Claim for workmen compensation has been estimated at ₹ 1,50,000.
(b) Adjust the capitals of the partners according to the new profit-sharing ratio by opening Partners' Current Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.

Solution

Revaluation Account

Dr.

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Provision for Workmen Compensation Claim

30,000

Revaluation Loss

 
   

  Ram’s Capital A/c

12,000

 
   

  Mohan’s Capital A/c

9,000

 
   

  Sohan’s Capital A/c

6,000

 
   

  Hari’s Capital A/c

3,000

30,000

 

30,000

 

30,000

 

Partners’ Capital Account

Dr.

Cr.

Particulars

Ram

Mohan

Sohan

Hari

Particulars

Ram

Mohan

Sohan

Hari

Revaluation A/c

12,000

9,000

6,000

3,000

Balance b/d

4,00,000

4,50,000

2,50,000

2,00,000

Ram’s Capital A/c

   

13,500

40,500

Sohan’s Capital A/c

13,500

4,500

   

Mohan’s Capital A/c

   

4,500

13,500

Hari’s Capital A/c

40,500

13,500

   

Current A/c’s

3,15,000

2,05,000

   

Current A/c’s

   

1,55,000

3,65,000

Balance c/d

1,27,000

2,54,000

3,81,000

5,08,000

         
 

4,54,000

4,68,000

4,05,000

5,65,000

 

4,54,000

4,68,000

4,05,000

5,65,000

 

Balance Sheet

Liabilities

Amount

(₹)

Assets

Amount

(₹)

Capital A/c

 

Fixed Assets

9,00,000

  Ram

1,27,000

 

Current Assets

5,20,000

  Mohan

2,54,000

 

Current A/c

 

  Sohan

3,81,000

 

  Ram

3,15,000

 

  Hari

5,08,000

12,70,000

  Mohan

2,05,000

5,20,000

Current A/c

     

  Sohan

1,55,000

     

  Hari

3,65,000

5,20,000

   

Claim against WCF

1,50,000

   
 

19,40,000

 

19,40,000

Working Notes

WN1: Calculation of Gaining/Sacrificing Ratio

(a) Sohan will compensate Ram and Mohan in the ratio 3 : 1

(b) Hari will compensate Ram and Mohan in the ratio of 3 : 1

Adjustment for Goodwill

Sohan’s Capital A/c

Dr.

 

18,000

 

Hari’s Capital A/c

Dr.

 

54,000

 

  To Ram’s Capital A/c

     

54,000

  To Mohan’s Capital A/c

     

18,000

(Sohan and Hari will compensate Ram and Mohan in their gaining ratio)

       

 

WN2: Calculation of Adjusted Capital

Ram = 4,54,000 – 12,000 = Rs 4,42,000

Mohan = 4,68,000 – 9,000 = Rs 4,59,000

Sohan = 2,50,000 – 24,000 = Rs 2,26,000

Hari = 2,00,000 – 57,000 = Rs 1,43,000

Total Combined Capital = 12,70,000

WN3: Calculation of New Capital

  Is there an error in this question or solution?

APPEARS IN

Solution Ram, Mohan, Sohan and Hari Were Partners in a Firm Sharing Profits in the Ratio of 4 : 3 : 2 : 1. on 1st April, 2016, Their Balance Sheet Was as Follows: Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio.
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