Page 107 - DEBKVOL-1

Chapter 5 Admission of a Partner 5.23
.
Illustration 15 (When the new partner brings proportionate capital).
A and B are partners sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as
at 31st March, 2018 was:

Liabilities ` Assets `
Capital A/cs: Machinery 66,000
A 70,000 Furniture 30,000
B 60,000 1,30,000 Investments 40,000
General Reserve 20,000 Stock 46,000
Bank Loan 18,000 Debtors 38,000
Creditors 72,000 Less: Provision for Doubtful Debts 4,000 34,000
Cash 24,000
2,40,000 2,40,000
On 1st April, 2018, they admitted C for 25% share in profits on the following terms:
(i) C brings in capital proportionate to his share after all adjustments and ` 8,000 for
goodwill out of his share of ` 14,000.
(ii) Reduce Furniture by 10%.
(iii) Half of Investments was to be taken over by A and B in their profit-sharing ratio and
remaining valued at ` 26,000.
(iv) New ratio will be 3 : 3 : 2.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet after C’s
admission. (Delhi 1999, Modified)
Solution:
Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Furniture A/c 3,000 By Investments A/c 6,000
To Gain (Profit) transferred to:
A’s Capital A/c 1,800
B’s Capital A/c 1,200 3,000
6,000 6,000

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars A B C Particulars A B C
` ` ` ` ` `
To Investments A/c 12,000 8,000 ... By Balance b/d 70,000 60,000 ...
To Balance c/d 84,400 62,600 49,000 By Cash A/c (WN 3) ... ... 49,000
By C’s Current A/c (WN 2) 5,400 600 ...
By Premium for Goodwill A/c 7,200 800 ...
By General Reserve A/c 12,000 8,000 ...
By Revaluation A/c 1,800 1,200 ...
—Gain (Profit)
96,400 70,600 49,000 96,400 70,600 49,000