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4.6 Double Entry Book Keeping (Section A)—ISC XII

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.

Particulars Ashwin Bijon Nitish Particulars Ashwin Bijon Nitish
` ` ` ` ` `
To Ashwin’s Capital A/c* ... 10,000 30,000 By Balance b/d 2,00,000 3,00,000 2,00,000
(Goodwill) By Revaluation A/c 20,000 30,000 20,000
To Bank A/c 1,30,000 ... ... By Bijon’s Capital A/c* 10,000 ... ...
(50% of amount (Goodwill)
due paid) By Nitish’s Capital A/c* 30,000 ... ...
To Ashwin’s Loan A/c 1,30,000 ... ... (Goodwill)
(Balance trfd.) By Bank A/c ... 30,000 1,60,000
To Balance c/d (WN 2) ... 3,50,000 3,50,000 (Balancing Figure)
2,60,000 3,60,000 3,80,000 2,60,000 3,60,000 3,80,000

*Ashwin’s Share of Goodwill ` 40,000 (i.e., ` 1,40,000 × 2/7) is adjusted between Bijon and Nitish in Gaining Ratio of 1 : 3 (WN 1).
Dr. BANK ACCOUNT Cr.

Particulars ` Particulars `
To Balance b/d 1,00,000 By Ashwin’s Capital A/c 1,30,000
To Revaluation A/c (Scrap sale) 80,000 By Balance c/d 2,40,000
To Bijon’s Capital A/c 30,000
To Nitish’s Capital A/c 1,60,000
3,70,000 3,70,000

BALANCE SHEET OF BIJON AND NITISH
as at 1st April, 2019
Liabilities ` Assets `
Bijon’s Capital 3,50,000 Land and Building 2,60,000
Nitish’s Capital 3,50,000 7,00,000 Machinery 2,40,000
Ashwin’s Loan 1,30,000 Stock 75,000
Creditors 80,000 Debtors 1,00,000
Less: Provision for Doubtful Debts 5,000 95,000
Cash at Bank 2,40,000
9,10,000 9,10,000

Working Notes:
1. Calculation of Gaining Ratio: Gain/(Sacrifice) = New Share – Old Share
1 3 1 1 2 3
Bijon’s Gain = – = Nitish’s Gain = – =
2 7 14 2 7 14
Thus, Gaining Ratio of Bijon and Nitish = 1 : 3.

2. Total Capital of the new firm = ` 7,00,000
Thus, Bijon’s Capital ` 3,50,000 (i.e., 1/2 of ` 7,00,000) and Nitish’s Capital ` 3,50,000 (i.e., 1/2 of ` 7,00,000).