Page 59 - ISCDEBK-12

Admission of a Partner 3.17

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars A B C Particulars A B C
` ` ` ` ` `
To Goodwill A/c 10,000 5,000 ... By Balance b/d 50,000 32,000 ...
To Advertisement By General Reserve A/c 4,000 2,000 ...
Expenditure A/c 6,000 3,000 ... By Workmen Compensation
To A’s Current A/c (Bal. Fig.) 2,000 8,000 ... Reserve A/c 16,000 8,000 ...
To Balance c/d 60,000 30,000 30,000 By Bank A/c ... ... 30,000
By Premium for Goodwill A/c 8,000 4,000 ...
78,000 46,000 30,000 78,000 46,000 30,000
BALANCE SHEET OF A, B AND C as at 31st March, 2018
Liabilities ` Assets `
Sundry Creditors 20,000 Cash (` 2,000 + ` 30,000 + ` 12,000) 44,000
Bills Payable 19,000 Sundry Debtors 50,000
Current A/cs: Less: Provision for Doubtful Debts 3,000 47,000
A 2,000 Stock 10,000
B 8,000 10,000 Machinery 23,000
Capital A/cs: Building 45,000
A 60,000
B 30,000
C 30,000 1,20,000
1,69,000 1,69,000
Working Notes:
1. Calculation of New Profit-Sharing Ratio:
C joins the firm for 1/4th share of profits. Therefore, 3/4 (i.e.,1 – 1/4) will be shared by A and B in the ratio of
2 : 1. Thus,
A’s share = 3/4 × 2/3 = 6/12; B’s share = 3/4 × 1/3 = 3/12;
C’s share of profit = 1/4,
Therefore, New Profit-sharing Ratio of A, B and C = 6/12 : 3/12 : 1/4 or 6 : 3 : 3 or 2 : 1 : 1.
2. Adjustment of Capital:
Total capital of the firm on the basis of C’s capital = ` 30,000 × 4/1 = ` 1,20,000
A’s Capital = ` 1,20,000 × 6/12 = ` 60,000
B’s Capital = ` 1,20,000 × 3/12 = ` 30,000
C’s Capital = ` 1,20,000 × 3/12 = ` 30,000.
Illustration 14.
Angad and Vivek are partners in a firm sharing profits and losses in the ratio of 3 : 2.
Their Balance Sheet as at 1st January, 2005 stood as follows:
BALANCE SHEET as at 1st January, 2005
Liabilities ` Assets `
Creditors 15,000 Cash 2,000
General Reserve 10,000 Debtors 18,000
Capital A/cs: Stock 20,000
Angad 30,000 Furniture 10,000
Vivek 25,000 55,000 Plant 30,000
80,000 80,000

Gopal is admitted as a partner on the above date on the following terms:
(i) He will pay ` 10,000 towards Goodwill for 1/4th share in profits.