Question

Rani and Geeta are partners sharing profits and losses 3 : 2 respectively. Their position on ${31}^{st}$ March, 2013 was as follows:
On $1^{st}$ April, 2013 they admitted Suvarna on the following terms:
(1) Suvarna should bring in cash Rs. 1,00,000 as capital for ${\frac{1}{5}}^{st}$ share in future profit and Rs. 25,000 as goodwill.
(2) Building should be revalued at Rs. 1,25,000.
(3) Depreciated furniture @ 12 $\frac{1}{2}$% p.a. and stock @ 10% p.a.
(4) R.D.D. should be maintained as it is.
(5) The capital Accounts of partners should be adjusted in their new profit sharing ratio through bank account.
Prepare:
profit and loss adjustment account, capital accounts and balance sheet of the new firm.

Answer 1

Profit and loss adjustment A/c

For the year ending 31.03.2013

Particulars	Amount	Particulars	Amount
To furniture	1250	By buildings a/c	25000
To stock	3100
To capital:
Rani (3/5)	12390
Geeta (2/5)	8260
	25000		25000

Partner’s Capital A/c

Particulars	Rani	Geeta	Suvarna	Particulars	Rani	Geeta	Suvarna
To bal c/d	240000	160000	100000	By bal b/d	100000	75000
				By general reserve	9000	6000
				By bank			100000
				By bank (goodwill)	15000	10000
				By p&l adjustment	12390	8260
				By bank	103610	60740
	240000	160000	100000		240000	160000	100000

Balance Sheet

As at 31.03.2013

Liabilities	Amount	Assets	Amount
capital:		Buildings	125000
Rani	240000	Furniture	8750
Geeta	160000	Stock	27900
Suvarna	100000	Debtors 50000
Creditors	10000	Less: RDD 1000	49000
Bills payable	5000	Bank	304350
	515000		515000

Workings:

Suvarna’s share =1/5

Therefore, rani’s share = 4/5 x 3/5 = 12/25

Geeta’s share = 4/5 x 2/5 = 8/25

New ratio = 12: 8: 5

New capital = 100000 x 5 = 500000