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Admission of a Partner 3.19

2. Calculation of New Profit-sharing Ratio:
1 3
Gopal is coming for 1/4th share. The remaining 1− th= th share will be divided between Angad and
4 4
Vivek in the ratio of 3 : 2. Therefore, the new profit-sharing ratio will be:
Angad’s Share of Profit = 3/5 of 3/4 = 9/20.
Vivek’s Share of Profit = 2/5 of 3/4 = 6/20.
Gopal’s Share of Profit = 1/4 = 5/20.
New Profit-sharing Ratio = 9/20 : 6/20 : 5/20 or 9 : 6 : 5.
3. Calculation of Proportionate Capital of Angad and Vivek on the basis of New Profit-sharing Ratio:

Capital of the New Partner (Gopal)
(i) Total Capital of the New Firm =
Share of Profit of the Neew Partner (Gopal)
` 20,000
= = ` 20,000 × 4/1 = ` 80,000.
1/4
(ii) Angad’s Capital = ` 80,000 × 9/20 = ` 36,000
Vivek’s Capital = ` 80,000 × 6/20 = ` 24,000.

Illustration 15.
Following is the Balance Sheet as at 31st March, 2018 of A and B, who share profits and
losses in the ratio of 3 : 2:
Liabilities ` Assets `
Capital A/cs: Plant and Machinery 10,000
A 10,000 Land and Building 8,000
B 10,000 20,000 Debtors 12,000
General Reserve 15,000 Less: Provision for Doubtful Debts 1,000 11,000
Workmen’s Compensation Reserve 10,000 Stock 12,000
Creditors 10,000 Cash 9,000
Profit and Loss A/c 5,000
55,000 55,000

On 1st April, 2018, they agreed to admit C for 1/5th share of profits into partnership on
the following terms:
(i) Provision for Doubtful Debts would be increased by ` 2,000.

(ii) Value of Land and Building would be increased to ` 18,000.
(iii) Value of Stock would be increased by ` 4,000.
(iv) The liability against the Workmen’s Compensation Reserve is determined at ` 2,000.
(v) C brought in as his share of goodwill ` 10,000 in cash.
(vi) C would bring in further cash as would make his capital equal to 20% of the total
capital of the new firm after the above revaluation and adjustments are carried out.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the firm after
C’s admission.