Ramesh wants to retire from the firm. The gain (profit) on revaluation on that date was ₹ 12,000. Mohan and Rahul want to share this in their new profit-sharing ratio of 3 : 2. Ramesh wants this to be shared equally. How is the profit to be shared? Give reasons.

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Solution

Revaluation of assets and liabilities is made at the time of Ramesh’s retirement and not after his retirement. Therefore, profits on revaluation will be distributed among all the partners in their old profit sharing ratio. In the absence of partnership deed, profits are distributed equally among all the partners.

Therefore, Profit Share of each Partner =

Journal

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

Revaluation A/c

Dr.

12000

To Ramesh’s Capital A/c

4000

To Mohan’s Capital A/c

4000

To Rahul’s Capital A/c

4000

(Revaluation profit distributed among all the partners in their old ratio)

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BALANCE SHEET OF SURESH, RAMESH, MAHESH AND Ganesh as on 1st April, 2016
Liabilities		Amount (₹)	Assets	Amount (₹)
Capital A/cs:			Fixed Assets	6,00,000
Suresh	1,00,000		Current Assets	3,45,000
Ramesh	1,50,000
Mahesh	2,00,000
Ganesh	2,50,000	7,00,000
Sundry Creditors		1,70,000
Workmen Compensation Reserve		75,000


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From the above date, the partners decided to share the future profits equally. For this purpose the goodwill of the firm was valued at ₹ 90,000. It was also agreed that:
(a) Claim against Workmen Compensation Reserve will be estimated at ₹ 1,00,000 and fixed assets will be depreciated by 10%.
(b) The Capitals of the partners will be adjusted according to the new profit-sharing ratio. For this, necessary cash will be brought or paid by the partners as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.

Q. Jaspal and Rosy were partners with capital contribution of ₹ 10,00,000 and ₹ 5,00,000 respectively. They do not have a Partnership Deed. Jaspal wants that profits of the firm should be shared in their capital ratio. Rosy convinced jaspal that profits should be shared equally. Explain how Rosy would have convinced Jaspal for sharing the profit equally.

Suresh and Ramesh were partners in a firm sharing profits in 5:3 ratio. On 1-4-2013 they admitted Deepak as a new partner for 1/4th share. On 31st July, 2013 Karan was admitted as a new partner for 1/6th share which he acquired equally from Suresh, Ramesh and Deepak. Calculate the new profit sharing ratio of Suresh, Ramesh, Deepak and Karan.

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Journal
Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
Revaluation A/c	Dr.		12000
To Ramesh’s Capital A/c				4000
To Mohan’s Capital A/c				4000
To Rahul’s Capital A/c				4000
(Revaluation profit distributed among all the partners in their old ratio)