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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Suresh, Ramesh, Mahesh and Ganesh were partners in a firm sharing profits in the ratio of 2 : 2 : 3 : 3. On 1st April, 2016, their Balance Sheet showed: Capitals – Suresh ₹1,00,000, Ramesh ₹1,50,000, Mahesh ₹2,00,000, Ganesh ₹2,50,000; Sundry Creditors ₹1,70,000; Workmen Compensation Reserve ₹75,000; and assets – Fixed Assets ₹6,00,000, Current Assets ₹3,45,000. From that date, the partners decided to share future profits equally. Goodwill was valued at ₹90,000. Also: (a) the claim against the Workmen Compensation Reserve was estimated at ₹1,00,000 and fixed assets were to be depreciated by 10%; (b) the capitals of the partners are to be adjusted according to the new profit-sharing ratio, necessary cash being brought in or paid off. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.
Revaluation Account
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Fixed Assets A/c (10% of 6,00,000) | 60,000 | By Loss transferred to Capital A/cs: | |
| To Provision for Claim against WCR (1,00,000 – 75,000) | 25,000 | Suresh 17,000; Ramesh 17,000; Mahesh 25,500; Ganesh 25,500 | 85,000 |
| Total | 85,000 | Total | 85,000 |
Goodwill adjustment – Sacrifice / (Gain): Suresh 1/20 (Gain), Ramesh 1/20 (Gain), Mahesh 1/20 (Sac), Ganesh 1/20 (Sac):
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Suresh’s Capital A/c Dr. (90,000 × 1/20) | 4,500 | |||
| Ramesh’s Capital A/c Dr. (90,000 × 1/20) | 4,500 | |||
| To Mahesh’s Capital A/c | 4,500 | |||
| To Ganesh’s Capital A/c | 4,500 | |||
| (Gaining partners compensating sacrificing partners for goodwill) |
Partners’ Capital Accounts
| Particulars (Dr.) | Suresh | Ramesh | Mahesh | Ganesh | Particulars (Cr.) | Suresh | Ramesh | Mahesh | Ganesh |
|---|---|---|---|---|---|---|---|---|---|
| To Revaluation A/c | 17,000 | 17,000 | 25,500 | 25,500 | By Balance b/d | 1,00,000 | 1,50,000 | 2,00,000 | 2,50,000 |
| To Mahesh’s / Ganesh’s Capital (Goodwill) | 4,500 | 4,500 | – | – | By Suresh’s / Ramesh’s Capital (Goodwill) | – | – | 4,500 | 4,500 |
| To Cash A/c (paid off) | – | – | 25,250 | 75,250 | By Cash A/c (brought in) | 75,250 | 25,250 | – | – |
| To Balance c/d | 1,53,750 | 1,53,750 | 1,53,750 | 1,53,750 | |||||
| Total | 1,75,250 | 1,75,250 | 2,04,500 | 2,54,500 | Total | 1,75,250 | 1,75,250 | 2,04,500 | 2,54,500 |
Balance Sheet as at 1st April, 2016
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Capital A/cs: Suresh, Ramesh, Mahesh, Ganesh (₹1,53,750 each) | 6,15,000 | Fixed Assets (6,00,000 – 60,000) | 5,40,000 |
| Claim against Workmen Compensation | 1,00,000 | Current Assets | 3,45,000 |
| Sundry Creditors | 1,70,000 | ||
| Total | 8,85,000 | Total | 8,85,000 |
Working Note: Adjusted capitals = Suresh ₹78,500; Ramesh ₹1,28,500; Mahesh ₹1,79,000; Ganesh ₹2,29,000 (total ₹6,15,000). New equal capital = ₹6,15,000 / 4 = ₹1,53,750 each; Suresh and Ramesh bring in cash, Mahesh and Ganesh withdraw cash (net cash movement is nil).
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.32 - 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.
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