Balance Sheet as on April 01, 2007
Liabilities |
Amount
Rs |
Assets |
Amount
Rs |
Bills Payable |
12,000 |
Free hold Premises |
48,000 |
Sundry Creditors |
18,000 |
Machinery |
|
27,000 |
Bajaj’s Loan |
41,320 |
Furniture |
|
11,160 |
Suri’s Current |
15,000 |
Stock |
25,300 |
Capital Account: |
|
Sundry Debtors |
20,000 |
|
Narang |
49,230 |
|
Less: Reserve for Bad Debt |
1,500 |
18,500 |
Suri |
16,410 |
65,640 |
Cash |
|
7,000 |
|
|
|
Narang’s Current Account |
15,000 |
|
1,51,960 |
|
1,51,960 |
Working Notes:
1. Bajaj Share in Goodwill = Total Goodwill of the firm x Retiring Partner’s Share
= \(21,000 \times \frac 13\)
= Rs 7,000
2. Gaining Ratio = New Ratio – Old Ratio
Narang's Gaining Share = \(\frac 34 - \frac 36 \)
\(= \frac {9-6}{12}\)
\(= \frac 3{12}\)
Suri's Gaining Share = \(\frac 14 - \frac 16 \)
\(= \frac {3-2}{12}\)
\(= \frac 1{12}\)
Gaining Ratio between Narang and Suri = 3:1
3. Calculation of New Capitals of the existing partners.
Balance in Narang’s Capital |
34,230 |
Balance in Suri’s Capital |
31,410 |
Total Capital of the New firm after revaluation of assets and liabilities and adjustment of Goodwill and Reserves |
Rs 65,640 |
Based on new profit sharing ratio of 3:1
Narang's Capital = 65,640 x \(\frac 34\)
= Rs 49,230
Suri's Capital = 65,640 x \(\frac 14\)
= Rs 16,410
NOTE:
i. In the given Question Suri’s Capital is Rs 30,000 instead of Rs 20,000.
ii. Due to insufficient balance in Bajaj’s Capital Account, the amount due to Bajaj is transferred to his Loan Account.