T.S. Grewal Class 12 Chapter 4 Q.76 - Admission of a Partner

Question 76

Leena and Rohit share profits in 3 : 2. Their Balance Sheet as at 31st March, 2018 showed: Sundry Creditors ₹80,000, Bills Payable ₹38,000, General Reserve ₹50,000, Capitals – Leena ₹1,60,000, Rohit ₹1,40,000; and assets – Cash ₹42,000, Debtors ₹1,32,000 less Provision ₹2,000 (₹1,30,000), Stock ₹1,46,000, Plant and Machinery ₹1,50,000. Manoj is admitted for a 1/5th share: (i) Manoj brings proportionate capital and ₹80,000 goodwill premium in cash; (ii) 10% of the General Reserve transferred to Provision for Doubtful Debts; (iii) workmen’s compensation claim ₹40,000; (iv) stock overvalued by ₹16,000; (v) new ratio 5 : 3 : 2. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet. (CBSE 2019)

Solution

Revaluation Account

Particulars (Dr.)	₹	Particulars (Cr.)	₹
To Claim against Workmen Compensation	40,000	By Loss (Leena 33,600; Rohit 22,400)	56,000
To Stock A/c	16,000
Total	56,000	Total	56,000

Partners’ Capital Accounts

Particulars (Dr.)	Leena	Rohit	Manoj	Particulars (Cr.)	Leena	Rohit	Manoj
To Revaluation A/c (Loss)	33,600	22,400	–	By Balance b/d	1,60,000	1,40,000	–
To Balance c/d	1,93,400	1,75,600	92,250	By Premium for Goodwill A/c	40,000	40,000	–
				By General Reserve A/c	27,000	18,000	–
				By Cash A/c (Capital)	–	–	92,250
Total	2,27,000	1,98,000	92,250	Total	2,27,000	1,98,000	92,250

Balance Sheet after Manoj’s admission

Liabilities	₹	Assets	₹
Sundry Creditors	80,000	Cash (42,000 + 80,000 + 92,250)	2,14,250
Bills Payable	38,000	Debtors (1,32,000 – 7,000)	1,25,000
Claim for Workmen Compensation	40,000	Stock (1,46,000 – 16,000)	1,30,000
Capitals: Leena 1,93,400; Rohit 1,75,600; Manoj 92,250	4,61,250	Plant and Machinery	1,50,000
Total	6,19,250	Total	6,19,250

Working Note: 10% of General Reserve (₹5,000) is added to the Provision for Doubtful Debts (now ₹7,000); the balance ₹45,000 is distributed 3 : 2. Manoj’s capital = 2/8 of the adjusted combined capital ₹3,69,000 × 10/8 = ₹92,250.