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On 31st March 2023 the Balance Sheet of Ram and Shyam who share profits and losses in the ratio of 3 : 2 was as follows:

Liabilities Assets
Creditors

General Reserve

Employee’s Provident Fund

Capitals:

Ram

Shyam

70,000

25,000

55,000

1,50,000

1,00,000

Cash at Bank

Debtors
Less: Provision for Doubtful Debts

Stock

Machinery

 

1,62,500
12,500

 

25,000

1,50,000

82,500

1,42,500

4,00,000 4,00,000

They decided to admit Mahesh on 1st April, 2023 for 1/5th share which Mahesh acquired wholly from Shyam on the following terms:

i) Mahesh shall bring ₹ 25,000 as his share of premium for goodwill.

ii) A debtor whose dues of ₹ 7,500 were written off as bad debt paid ₹ 5,000 in settlement.

iii) A claim of ₹ 12,500 on account of workmen’s compensation was to be provided for.

iv) Machinery was undervalued by ₹ 5,000. Stock was valued 10% more than its market value.

v) Mahesh was to bring in capital equal to 20% of the combined capitals of Ram and Shyam after all adjustments.

Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the new firm.

[Ans: Loss on Revaluation – ₹ 10,000; Partner’s Capital Accounts: Ram – ₹ 1,59,000; Shyam – ₹ 1,31,000; Mahesh – ₹ 58,000; Balance Sheet Total – ₹ 4,85,500.]

 

Anurag Pathak Changed status to publish May 30, 2023
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