Loading Tutorstips...
✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
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 showed: Capitals – Ram ₹4,00,000, Mohan ₹4,50,000, Sohan ₹2,50,000, Hari ₹2,00,000; Workmen Compensation Reserve ₹1,20,000; and assets – Fixed Assets ₹9,00,000, Current Assets ₹5,20,000. From that date, the partners decided to share future profits in the ratio of 1 : 2 : 3 : 4. Goodwill of the firm was valued at ₹1,80,000. Also: (a) the claim for workmen compensation was estimated at ₹1,50,000; (b) the capitals of the partners are to be adjusted according to the new profit-sharing ratio by opening Partners’ Current Accounts. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.
Revaluation Account
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Provision for Workmen Compensation Claim (1,50,000 – 1,20,000) | 30,000 | By Loss transferred to Capital A/cs: Ram 12,000; Mohan 9,000; Sohan 6,000; Hari 3,000 | 30,000 |
| Total | 30,000 | Total | 30,000 |
Goodwill adjustment – Sacrifice / (Gain): Ram 3/10 (Sac), Mohan 1/10 (Sac), Sohan 1/10 (Gain), Hari 3/10 (Gain):
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Sohan’s Capital A/c Dr. (1,80,000 × 1/10) | 18,000 | |||
| Hari’s Capital A/c Dr. (1,80,000 × 3/10) | 54,000 | |||
| To Ram’s Capital A/c (1,80,000 × 3/10) | 54,000 | |||
| To Mohan’s Capital A/c (1,80,000 × 1/10) | 18,000 | |||
| (Gaining partners compensating sacrificing partners for goodwill) |
Partners’ Capital Accounts
| Particulars (Dr.) | Ram | Mohan | Sohan | Hari | Particulars (Cr.) | Ram | Mohan | Sohan | Hari |
|---|---|---|---|---|---|---|---|---|---|
| To Revaluation A/c | 12,000 | 9,000 | 6,000 | 3,000 | By Balance b/d | 4,00,000 | 4,50,000 | 2,50,000 | 2,00,000 |
| To Ram’s Capital (Goodwill) | – | – | 13,500 | 40,500 | By Sohan’s Capital (Goodwill) | 13,500 | 4,500 | – | – |
| To Mohan’s Capital (Goodwill) | – | – | 4,500 | 13,500 | By Hari’s Capital (Goodwill) | 40,500 | 13,500 | – | – |
| To Current A/c | 3,15,000 | 2,05,000 | – | – | By Current A/c | – | – | 1,55,000 | 3,65,000 |
| To Balance c/d | 1,27,000 | 2,54,000 | 3,81,000 | 5,08,000 | |||||
| Total | 4,54,000 | 4,68,000 | 4,05,000 | 5,65,000 | Total | 4,54,000 | 4,68,000 | 4,05,000 | 5,65,000 |
Balance Sheet as at 1st April, 2016
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Capital A/cs: Ram 1,27,000; Mohan 2,54,000; Sohan 3,81,000; Hari 5,08,000 | 12,70,000 | Fixed Assets | 9,00,000 |
| Ram’s Current A/c | 3,15,000 | Current Assets | 5,20,000 |
| Mohan’s Current A/c | 2,05,000 | Sohan’s Current A/c | 1,55,000 |
| Claim against Workmen Compensation | 1,50,000 | Hari’s Current A/c | 3,65,000 |
| Total | 19,40,000 | Total | 19,40,000 |
Working Note: Adjusted capitals (after revaluation loss and goodwill) = Ram ₹4,42,000; Mohan ₹4,59,000; Sohan ₹2,26,000; Hari ₹1,43,000 (total ₹12,70,000). New capitals in 1 : 2 : 3 : 4 = Ram ₹1,27,000; Mohan ₹2,54,000; Sohan ₹3,81,000; Hari ₹5,08,000. Differences are transferred to Current Accounts.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 3 Q.31 - Change in Profit-Sharing Ratio Among the Existing Partners", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 3 - Change in Profit-Sharing Ratio Among the Existing Partners.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
You can take our custom-built interactive practice quiz directly on this page to test your understanding of "T.S. Grewal Class 12 Chapter 3 Q.31 - Change in Profit-Sharing Ratio Among the Existing Partners" instantly.