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:
Balance Sheet of Ram and Shyam as at 31st March, 2024
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 70,000 | Cash at Bank | 25,000 |
| General Reserve | 25,000 | Debtors 162,500 Less PDD: 12,500 |
1,50,000 |
| Employees’ Provident Fund |
55,000 | Stock | 82,500 |
| Capitals: Ram Shyam |
1,50,000 1,00,000 |
Machinery | 1,42,500 |
| 4,00,000 | 4,00,000 |
They decided to admit Mahesh on 1st April, 2024 for 1/5 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 by5,000. 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, Partners’ Capital Accounts and Balance Sheet of the new firm.
[Ans: Loss on Revaluation – 10,000; Partners’ Capital Accounts: Ram – 1,59,000; Shyam – 1,31,000; Mahesh – 58,000; Balance Sheet Total – 4,85,500.]
Solution :
