T.S. Grewal Class 12 Chapter 4 Q.71 - Admission of a Partner

Question 71

Gautam and Yashica share profits in 3 : 1. Their Balance Sheet as at 31st March, 2018 showed: Sundry Creditors ₹50,000, Bills Payable ₹30,000, Capitals – Gautam ₹4,00,000, Yashica ₹1,00,000; and assets – Furniture ₹60,000, Stock ₹1,40,000, Debtors ₹80,000, Cash in Hand ₹90,000, Machinery ₹2,10,000. Asma is admitted for a 3/8th share with capital ₹2,10,000 and ₹50,000 for goodwill. New ratio 3 : 2 : 3. (ii) Machinery depreciated 10% and Furniture by ₹5,000; (iii) Stock revalued at ₹2,10,000; (iv) Provision for Doubtful Debts @ 10% of debtors; (v) capitals to be in the new ratio on the basis of the new partner’s capital, adjustments through Current Accounts. Prepare the Revaluation Account, Capital Accounts and Balance Sheet. (CBSE Sample Paper 2019)

Solution

Revaluation Account

Particulars (Dr.)	₹	Particulars (Cr.)	₹
To Machinery A/c	21,000	By Stock A/c	70,000
To Furniture A/c	5,000
To Provision for Doubtful Debts A/c	8,000
To Profit (Gautam 27,000; Yashica 9,000)	36,000
Total	70,000	Total	70,000

Partners’ Capital Accounts

Particulars (Dr.)	Gautam	Yashica	Asma	Particulars (Cr.)	Gautam	Yashica	Asma
To Gautam’s Current A/c	2,67,000	–	–	By Balance b/d	4,00,000	1,00,000	–
To Balance c/d	2,10,000	1,40,000	2,10,000	By Cash A/c (Capital)	–	–	2,10,000
				By Premium for Goodwill A/c	50,000	–	–
				By Revaluation A/c	27,000	9,000	–
				By Yashica’s Current A/c	–	31,000	–
Total	4,77,000	1,40,000	2,10,000	Total	4,77,000	1,40,000	2,10,000

Balance Sheet as at 1st April, 2018

Liabilities	₹	Assets	₹
Sundry Creditors	50,000	Furniture (60,000 – 5,000)	55,000
Bills Payable	30,000	Stock	2,10,000
Capitals: Gautam 2,10,000; Yashica 1,40,000; Asma 2,10,000	5,60,000	Debtors (80,000 – 8,000)	72,000
Gautam’s Current A/c	2,67,000	Cash (90,000 + 2,10,000 + 50,000)	3,50,000
		Machinery (2,10,000 – 21,000)	1,89,000
		Yashica’s Current A/c	31,000
Total	9,07,000	Total	9,07,000

Working Note: Sacrificing ratio – Gautam 3/8, Yashica Nil, so the whole premium goes to Gautam. New total capital = ₹2,10,000 × 8/3 = ₹5,60,000 → Gautam ₹2,10,000, Yashica ₹1,40,000, Asma ₹2,10,000; differences transferred to Current Accounts.