Question

Pradeep and Dhanraj were partners in a firm sharing profits in the ratio of 3 : 1 . Their Balance Sheet on 31st March, 2018 was:

Liabilities		₹	Assets		₹
Creditors		30,000	Cash		4,000
Bills Payable		1,000	Debtors	50,000
Reserve Fund		16,000	Less : Provision for D.D.	5,000	45,000
Outstanding Salary		3,000	Stock		30,000
Capital A/cs:			Bils Receivable		10,000
Pradeep	60,000		Patents		1,000
Dhanraj	20,000	80,000	Machinery		40,000
		1,30,000			1,30,000

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They admitted Leander as a new partner on this date . New profit-sharing ratio is agreed as 3 : 2 ; 3 . Leander brings in proportionate capital after the following adjustments:
(a) Leander brings ₹ 16,000 as his share fo goodwill.
(b) Provisions for Doubtful Debts is to be reduced by ₹ 2,000.
(c) There is an old Typewriter valued at ₹ 2,400. It does not appear in the books of the firm . It is now to be recorded.
(d) Patents are valueless.
Prepare Revaluation Account , Capital Accounts and opening Balance Sheet of Pradeep , Dhanraj and Leander.

Answer 1

Revaluation Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Patents	1,000	Provision for Doubtful Debts	2,000
Profit on transferred to		Typewriter	2,400
Pradeep Capital	2,550
Dhanraj Capital	850
	4,400		4,400

Partners’ Capital Accounts
Dr.							Cr.
Particulars	Pradeep	Dhanraj	Leander	Particulars	Pradeep	Dhanraj	Leander
				Balance b/d	60,000	20,000
Balance c/d	90,550	24,850		Reserve Fund	12,000	4,000
(after adjustments)				Revaluation	2,550	850
				Premium for Goodwill	16,000
	90,550	24,850			90,550	24,850
				Balance c/d	90,550	24,850
				Cash			69,240
Balance c/d	90,550	24,850	69,240
	90,550	24,850	69,240		90,550	24,850	69,240

Balance Sheet as on March 31, 2018 after Leander’s admission
Liabilities		Amount Rs	Assets		Amount Rs
Creditors		30,000	Debtors	50,000
Bills Receivable		1,000	Less: Prov. for D. Debts	3,000	47,000
Outstanding Salary		3,000	Stock		30,000
Capital A/cs:			Bills Receivable		10,000
Pradeep	90,550		Machinery		40,000
Dhanraj	24,850		Typewriter		2,400
Leander	69,240	1,84,640	Cash		89,240
		2,18,640			2,18,640

Working Notes

WN1

Leander acquires his share of profit from Pradeep only. Therefore, amount for goodwill brought by Leander will be taken by Pradeep alone.

WN2
Distribution of Revaluation Profit


WN3
Distribution of Reserve Fund


WN4
Calculation of Leander’s Capital
Combined Capital of Pradeep and Dhanraj after all adjustments = 90,550 + 24,850 = 1, 15,400
Combined share of profit of Pradeep and Dhanraj = 1 − Leander share

Total Capital of the firm on the basis of combined capital of Pradeep and Dhanraj


WN5

Cash Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	4,000
Leander’s Capital	69,240
Premium for Goodwill	16,000	Balance c/d	89,240
	89,240		89,240