Vimal and Nirmal are partners sharing profits in the ratio of 3 : 2. Following was the position of their business as at 31st March, 2024:
Vimal and Nirmal are partners sharing profits in the ratio of 3 : 2. Following was the position of their business as at 31st March, 2024:
On 1st April, 2024, Kailash agrees to join the business on the following terms and conditions:
(I) He will introduce ₹ 40,000 as his capital and pay ₹ 20,000 to the existing partners for his share of goodwill.
(ii) The new profit sharing ratio will be 2 : 1 : 1 respectively for Vimal, Nirmal and Kailash.
(iii) A revaluation of assets will be made by reducing plant and machinery to ₹ 35,000 and stock by 10%. Provision of ₹ 1,000 is to be created for bad and doubtful debts.
Pass journal entries for the above arrangements and give the balance sheet of the newly constituted firm. Also specify the sacrificing ratio.
[Ans. Sacrifice Ratio 2 : 3; Loss on revaluation ₹ 20,000; Capital Accounts Vimal ₹ 62,000; Nirmal and Kailash ₹ 40,000 each; Cash Balance ₹ 74,000; Balance Sheet total ₹ 1,62,000.]
| Liabilities | ₹ | Assets | ₹ |
| Sundry Creditors | 20,000 | Cash | 14,000 |
| Capital Accounts: Vimal Nirmal | 60,000 32,000 | Debtors | 18,000 |
| Profit & Loss A/c | 20,000 | Plant & Machinery | 50,000 |
| Stock | 40,000 | ||
| Goodwill | 10,000 | ||
| 1,32,000 | 1,32,000 |
Anurag Pathak Answered question August 29, 2024
