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M.120 An Aid to Accountancy—CBSE XII
17.
Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Gain (Profit) transferred to: By Machinery A/c 70,000
B’s Capital A/c 50,000 By Stock A/c 10,000
C’s Capital A/c 30,000 80,000
80,000 80,000

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars B (`) C (`) A (`) Particulars B (`) C (`) A (`)
To Goodwill A/c (WN 4) 50,000 30,000 ... By Balance b/d 3,20,000 3,40,000 ...
To Bank A/c 20,000 1,60,000 ... By General Reserve A/c 50,000 30,000 ...
(Balancing Figure) By Bank A/c ... ... 3,00,000
To Balance c/d (WN 3) 3,75,000 2,25,000 3,00,000 By Goodwill A/c (WN 1) 25,000 15,000 ...
By Revaluation A/c (Profit) 50,000 30,000 ...
4,45,000 4,15,000 3,00,000 4,45,000 4,15,000 3,00,000

BALANCE SHEET OF NEW FIRM
as at 1st April, 2018
Liabilities ` Assets `
Capital A/cs: Machinery 4,50,000
B 3,75,000 Furniture 50,000
C 2,25,000 Debtors 2,30,000
A 3,00,000 9,00,000 Stock 80,000
Bank Loan 60,000 Bank (WN 5) 1,70,000
Creditors 60,000 A’s Current A/c (WN 4) 40,000
10,20,000 10,20,000
Working Notes:
1. Valuation and Adjustment of Goodwill: `
(a) Present value of Goodwill (` 60,000 × 2) 1,20,000
(b) Value of Goodwill as per books 80,000
(c) Unrecorded amount of Goodwill 40,000
Thus, Goodwill Account will be raised by crediting B and C in their old profit-sharing ratio, i.e., 5 : 3.
2. Calculation of New Profit-sharing Ratio:
Let the total share be = 1
Share given to A = 1/3
Remaining share = 1 – 1/3 = 2/3, will be shared by B and C in their old profit-sharing ratio, i.e.,
B’s new share = 2/3 × 5/8 = 10/24
C’s new share = 2/3 × 3/8 = 6/24
A’s share = 1/3 or 8/24
Thus, New Profit-sharing Ratio of B, C and A = 10/24 : 6/24 : 8/24 or 5 : 3 : 4.
3. Adjustment of Capital:
A brings ` 3,00,000 for his share of 1/3
Hence, Total Capital of the New Firm = ` 3,00,000 × 3 = ` 9,00,000
B’s Capital in New Firm = ` 9,00,000 × 5/12 = ` 3,75,000
C’s Capital in New Firm = ` 9,00,000 × 3/12 = ` 2,25,000.