If it is agreed that the capital of all the partners be proportionate to the new profit sharing ratio at the time of admission of new partner. How will you work out the new Partner's capital?

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Solution

For calculating new partner's capital on proportionate basis we must work out following points.

Step 1. Find out new partner's share.

Step 2. Find out remaining share.

Step 3. Find out adjusted balance of existing partners.

(Adjusted balance = Opening capital + Share of reserve + Share of Workmen Compensation Fund, if any + Share of Investment Fluctuation Fund, if any + Share in Profit and Loss (Profit) + Revaluation profit + any liability taken over + Share in premium for Goodwill - old goodwill written off - Advertisement suspense - Share in Profit and Loss (loss) - any asset taken over - Revaluation loss - any goodwill withdrawn)

Step 4. Add all adjusted balance of existing partner.

Step 5. New capital of firm = Step 4 $\times$ Reciprocal of step 2.

Step 6. Step 5 $\times$ Step 1 = New partner's share of capital.

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Similar questions

If it is agreed that the capital of all the partners should proportionate to the new profit sharing ratio, how will you work out the new capital of each partner? Give examples and state how necessary adjustments will be made.

If it is agreed that the capital of all the partners be proportionate to the new profit sharing ratio, how will you work out the new capital of each partner? Give examples and state how necessary adjustments will be made.

Q. Consider the following statements :
1. At the time of admission of new partner undistributed profit or losses are distributed to all partners in new ratio.
2. Profit or loss on revaluation of assets and liabilities is transferred to old partner's capital account in old profit sharing ratio.
3. Goods brought in by incoming partner in cash for joining in a partnership firm is taken away by the old partner's in their new profit-sharing ratio.
Which of the above statement/s is/are true ?

Q. The extra capital of Rs.10,000 bought by new partner above the investment of old partners to share the same proportion of profits is .

Q. When required amount for premium for goodwill is not brought in by new partner, goodwill account is raised in the books of the firm by debiting goodwill account and crediting partners capital account in old profit sharing ratio and written off in ______ if it agreed not show goodwill in the books of the firm OR ALTERNATIVELY premium for goodwill should be adjusted through partners capital account by debiting new partners share of goodwill to his account and crediting old partners capital accounts in _________.

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