Question

Ram and Gopal are partners in a firm sharing profit and loss in the ratio of 3:1 respectively. The following is their Balance Sheet as on 31 /12/2008.

They admit Menon into partnership on 1-1- 2009 on the following terms. 

1. Menon should bring Rs. 10,000 as his capital for 1/5^th share and 18,000 as her share of good will.

2. Liability for workmen compensation estimated at Rs. 1500. 

3. Value of land and building be appreciated by Rs. 5000. 

4. Stock reduced by 5% 5. A provision of 5% should be made for doubtful debts in debtors.

Prepare revaluation a/c, capital account of partners and the Balance sheet of new firm.

Answer 1

Revaluation A/c

Capital A/c

Balance Sheet

Working Note: 

Menon’s share of goodwill = 18,000 

Sacrificing ratio = 3:1

Goodwill credited in Ram = 18,000 × 3/4 = 13,500 

Gopal = 18,000 × 1/4 = 4,500.