T.S. Grewal Class 12 Chapter 4 Q.58 - Admission of a Partner

Question 58

A and B share profits in the ratio of 2 : 1. Their Balance Sheet as at 31st March, 2024 showed: Capitals – A ₹15,000, B ₹10,000; Sundry Creditors ₹32,950; and assets – Building ₹25,000, Plant and Machinery ₹17,500, Stock ₹10,000, Sundry Debtors ₹4,850, Cash in Hand ₹600. C is admitted: (a) C brings ₹7,500 capital and ₹3,000 goodwill for a 1/4th share; (b) Stock and Plant & Machinery reduced by 5%; (c) a Provision for Doubtful Debts of ₹375 created; (d) Building appreciated by 10%. Prepare the Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm.

Solution

Revaluation Account

Particulars (Dr.)	₹	Particulars (Cr.)	₹
To Stock A/c	500	By Building A/c	2,500
To Plant and Machinery A/c	875
To Provision for Doubtful Debts A/c	375
To Profit (A 500; B 250)	750
Total	2,500	Total	2,500

Partners’ Capital Accounts

Particulars (Dr.)	A	B	C	Particulars (Cr.)	A	B	C
To Balance c/d	17,500	11,250	7,500	By Balance b/d	15,000	10,000	–
				By Cash A/c (Capital)	–	–	7,500
				By Premium for Goodwill A/c	2,000	1,000	–
				By Revaluation A/c (Profit)	500	250	–
Total	17,500	11,250	7,500	Total	17,500	11,250	7,500

Balance Sheet after admission of C

Liabilities	₹	Assets	₹
Capitals: A 17,500; B 11,250; C 7,500	36,250	Building (25,000 + 2,500)	27,500
Sundry Creditors	32,950	Plant and Machinery (17,500 – 875)	16,625
		Stock (10,000 – 500)	9,500
		Sundry Debtors (4,850 – 375)	4,475
		Cash in Hand (600 + 10,500)	11,100
Total	69,200	Total	69,200