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Question

Pinky, Qumar and Roopa, partners in a firm sharing profits and losses in the ratio of 3:2:1. Seema is admitted as a new partner for 14 share in the profits of the firm which he gets 18 from Pinky and 116 each from Qumar and Roopa. The total capital of the new firm after Seema's admission will be Rs. 2,40,000. Seema is required to bring in cash equal to 14 of the total capital of the new firm. The capitals of the old partners also have to be adjusted in the proportion of their profit sharing ratio. The capitals of Pinky, Qumar, and Roopa after all adjustments in respect of goodwill and revaluation of assets and liabilities have been made are Pinky Rs. 80,000, Qumar Rs. 30,000 and Roopa Rs. 20,000. Calculate the capitals of all the partners and record the necessary journal entries for doing adjustments in respect of capitals according to the agreement between the partners.

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Solution

New profit sharing ratio of

Pinky = 3618=12324=924

Qumar = 26116=16348=1348

Roopa = 16116=8348=548

Hence, new ratio = 924:1348:548:14

or 1848:1348:548:1248

or 18 : 13 : 5 : 12

Capital = 2,40,000

Each partner's new capital

Pinky = 2,40,000×1848=90,000

Qumar = 2,40,000×1348=65,000

Roopa = 2,40,000×548=25,000

Seema = 2,40,000×1248=60,000

Adjustment in cash if any

PartnerActual Capital AfterNew CapitalDifference All AdjustmentsRequiredExcess / ShortPinky80,00090,00010,000 shortQumar30,00065,00035,000 shortRoopa20,00025,0005,000 shortSeema60,00060,000 (his share)

Journal Entry
DateParticularsL.FAmt.(Cr)Amt.(Cr)(i)Cash A/c Dr1,10,000 To Pinki's Capital A/c10,000 To Qumar's Capital A/c35,000 To Roopa's Capital A/c5,000 To Seema's Capital A/c60,000(Capital Rs. 60,000 paid by Seema and adjustmentof deficiency paid by existing partners.) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Alternatively

Journal Entries
DateParticularsL.FAmt.(Cr)Amt.(Cr)(i)Bank A/c Dr60,000 To Seema's Capital A/c60,000(Seema bring her share of capital for 1/4 share of profit) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––(ii)Bank A/c Dr50,000 To Pinki's Capital A/c10,000 To Qumar's Capital A/c35,000 To Roopa's Capital A/c5,000(Amount brought by Pinky, Qumar and Roopa to move capital equal to their proportion.)


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