A and B were in partnership sharing profits and losses in the ratio of 3 : 1. On 1st April, 2024 they admit C as a partner on the following terms: (a) That C brings ₹ 1,00,000 as his capital and ₹ 50,000 for goodwill, half of which to be withdrawn by A and B
A and B were in partnership sharing profits and losses in the ratio of 3 : 1. On 1st April, 2024 they admit C as a partner on the following terms:
(a) That C brings ₹ 1,00,000 as his capital and ₹ 50,000 for goodwill, half of which to be withdrawn by A and B.
(b) That the value of land and buildings to be appreciated by 15 percent and that of stocks and machinery & fixtures to be reduced by 7 and 5 percent respectively.
(c) That provision for doubtful debts be made at 5 percent.
(d) That ₹ 15,000 be provided for an unforeseen liability.
(e) That C to be given 1/5th share and the profit sharing ratio between A and B to remain the same.
(f) That ₹ 11,000 is to be received as commission, hence to be accounted for.
The Balance Sheet of the old partnership as at 31st March, 2024 stood as:
Give necessary Journal entries, ledger accounts and the balance sheet of the newly constituted firm.
[Ans. Gain on revaluation ₹ 12,900; Capital Accounts A ₹ 4,28,425; B ₹ 2,09,475; C ₹ 1,00,000, Cash Balaqnce ₹ 1,65,000 and Balance Sheet total ₹ 11,02,900.]
| Liabilities | ₹ | Assets | ₹ |
| Sundry Creditors | 3,50,000 | Cash in Hand | 40,000 |
| Capital Accounts: A B | 4,00,000 2,00,000 | Books Debts | 2,00,000 |
| Stock | 1,80,000 | ||
| Machinery & Fixtures | 2,00,000 | ||
| Land and Building | 3,30,000 | ||
| 9,50,000 | 9,50,000 |
Anurag Pathak Answered question August 28, 2024
Solution:-
Note:-
In the absence of any further information the sacrificing ratio is always equal to the old ratio i.e. 3 : 1
The premium for goodwill is credited to the sacrificing partners A and B in sacrificing ratio that is 3 : 1.
Anurag Pathak Changed status to publish August 28, 2024
