Question

Ramesh, Dinesh and Mahesh were partners sharing profits and losses in the ratio of 5 : 2 : 3. Their balance sheet as on 31st March 2020 was as follows:

Balance Sheet as on 31st March 2020
Liabilities	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital Accounts:		Plant and Machinery		42,000
Ramesh	46,000	Building		50,000
Dinesh	42,000	Stock		30,400
Mahesh	27,600	Debtors	26,800	26,000
Creditors	30,000	Less: R.D.D.	800
Bills Payable	11,200	Bank		32,400
General Reserve	24,000
	1,80,800			1,80,800

Dinesh retired from business on 1^st April 2020 on the following terms:

1. The assets were revalued as under:
   1. Stock ₹ 38,000
   2. The building is appreciated by 10%.
   3. Plant and Machinery is to be depreciated by 10%.
   4. R.D.D. is increased up to ₹ 1,000.
2. The goodwill of the retiring partner is valued at 18,000, and the remaining partners decided that the goodwill be written off in their new ratio, which will be 5 : 3.
3. Amount due to Dinesh is to be transferred to his loan account.

Prepare:

1. Revaluation Account
2. Partners’ Capital Account and
3. Balance Sheet of New Firm.

Answer 1

In the Books of Shyam Traders, Pune
Dr.	Profit and Loss Adjustment A/c			Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)
To R. D. D (1000 − 800)		200	By Stock A/c	7,600
To Plant and Machinery		4,200	By Building A/c	5,000
To Partners Capital A/c’s (profit)		8,200
Ramesh	4,100
Dinesh	1,640
Mahesh	2,460
		12,600		12,600

 

Dr.	Partner’s Capital Account						Cr.
Particulars	Ramesh (₹)	Dinesh (₹)	Mahesh (₹)	Particulars	Ramesh (₹)	Dinesh (₹)	Mahesh (₹)
To Goodwill A/c	11,250	-	6,750	By Balance b/d	46,000	42,000	27,600
To Loan A/c	-	66,440	-	By Goodwill A/c	-	18,000	-
To Balance c/d	50,850	-	30,510	By General Reserve A/c	12,000	4,800	7,200
				By Profit and Loss Adj. A/c (Profit)	4,100	1,640	2,460
	62,100	66,440	37,260		62,100	66,440	37,260

 

Balance Sheet as on 1st April 2020
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Creditors		30,000	Stock	30,400	38,000
Bills Payable		11,200	Add: Appreciation	7,600
Capital A/c:		81,360	Building	50,000	55,000
Ramesh	50,850		Add: Appreciation	5,000
Mahesh	30,510		Debtors	26,800	25,800
Dinesh’s loan A/c		66,440	Less: R.D.D	1,000
			Plant and Machinery	42,000	37,800
			Less: Depreciation	4,200
			Bank		32,400
		1,89,000			1,89,000

Working Note:

(1) General Reserve Distribution (5 : 2 : 3):

1. Ramesh = `24,000 xx 5/10`

= 12,000

2. Dinesh = `24,000 xx 2/10`

= 4,800

3. Mahesh = `24,000 xx 3/10`

= 7,200

(2) Goodwill Adjustment:

1. Dinesh’s share of goodwill is given as ₹ 18,000.

2. it is written off by the remaining partners in the new ratio (5 : 3).

3. Ramesh = `18,000 xx 5/8`

= 11,250

4. Mahesh = `18,000 xx 3/8`

= 6,750