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Chapter 5 Admission of a Partner 5.13
.
Dr. PARTNERS’ CURRENT ACCOUNTS Cr.
Particulars X Y Particulars X Y
` ` ` `
To Investments A/c 6,000 ... By Balance b/d 10,000 2,000
To Revaluation A/c 3,420 2,280 By General Reserve A/c 7,200 4,800
To Goodwill A/c 6,000 4,000 By Premium for Goodwill A/c 8,400 3,600
To Cash A/c 4,200 1,800
To Balance c/d 5,980 2,320
25,600 10,400 25,600 10,400
OPENING BALANCE SHEET OF THE RECONSTITUTED FIRM as at 1st April, 2018
Liabilities ` Assets `

Creditors 15,000 Cash 31,000
Outstanding Salaries 5,000 Debtors 20,000
Capital A/cs: Less: Provision for Doubtful Debts 1,000 19,000
X 54,000 Accrued Income 1,500
Y 36,000 Patents 14,800
Z 20,000 1,10,000 Machinery 72,000
Current A/cs:
X 5,980
Y 2,320 8,300
1,38,300 1,38,300

Working Notes:
1. As there are Current Account balances appearing in the Balance Sheet, it means that the Capital Accounts are
fixed. Hence, all transactions relating to the Capital Accounts will be passed through the Current Accounts.
2. Goodwill appearing in the Balance Sheet is written off by the old partners in their old profit-sharing ratio.
3. Calculation of Goodwill:
` 25,000 ` + 30,000
+ 26,000 `
Average Profit = = ` 27,000
3
Goodwill = ` 27,000 × 2 = ` 54,000
Z brings in his share of goodwill in cash.
2
Therefore, the amount of goodwill brought in by Z = ` 54,000 × = ` 12,000.
9
3 4 7 2 3 3
4. X Sacrifices = - = ; Y Sacrifices = - = ; Thus, Sacrificing Ratio of X and Y = 7 : 3.
5 9 45 5 9 45
Illustration 10.
Following was the Balance Sheet as at 31st March, 2018 of A, B and C sharing profits and
losses in the ratio of 6 : 5 : 3 respectively:

Liabilities ` Assets `
Capital A/cs: Land and Building 24,000
A 19,000 Furniture 3,500
B 16,000 Stock 14,000
C 8,000 43,000 Debtors 12,600
Creditors 9,000 Cash 900
Bills Payable 3,000
55,000 55,000