Akash and Suraj are partners in a firm sharing profits and losses in the ratio 3:2. Their balance sheet as on 31st March, 2013 was as follows:

Balance Sheet as on 31st March, 2013
31st march, 2013
Liabilities
Amount
(Rs.)
Assets
Amount
(Rs.)
Capital A/c
Furniture
2,100
Akash
50,000
Stock
28,700
Suraj
50,000
Land and Building
35,000
General Reserve
10,000
Plant and Machinery
49000
Sundry Creditors
60,000
Sundry debtors
63,000
Bills Payable
17,000
Cash
9,200
1,87,000
1,87,000


They agreed to admit Sanjay in their partnership on 1st April, 2013, on the following terms:

(1) Sanjay should bring Rs. 1,500, as his share of goodwill in the firm, and Rs. 2,000 as his capital.
(2) Reserve for doubtful debts is to be provided @ 5% on debtors.
(3) Land and building be depreciated at 10% p.a.
(4) Plant and Machinery to be depreciated @ 5% and stock to be depreciated @ 10% p.a.
(5) The new profit sharing ratio will be 2: 1: 1.

Prepare:
(a) Revaluation Account.
(b) Partners’ Capital Accounts.
(C)  New Balance Sheet of the firm.

Solution:


Revaluation Account
Particulars
Amount
Particulars
Amount
To Stock
2870


To Land and Building
3500


To Plant and Machinery
2450
To Loss of Revaluation A/c

To R.D.D.
3150
Akash’s Capital A/c
7182


Suraj’s Capital A/c
4788

11970

11970

Partners’ Capital Account
Particulars
Akash
Suraj
Sanjay
Particulars
Akash
Suraj
Sanjay
By Loss on Revaluation A/c
7182
4788
-
By Balance b/d
50000
50000





By General Reserve
(3:2)
6000
4000





By Cash A/c


2000




By Goodwill A/c
1167
333

To Balance c/d
49985
49545
2000





57167
54333
2000

57167
54333
2000

New Balance Sheet as on 1 April, 2013
Liabilities
Amount
Amount
Assets
Amount
Amount
Capital A/c


Furniture

2100
Akash
49985

Stock
28700

Suraj
49545

(-) Depreciation @ 10%
-2870
25830
Sanjay
2000
101530
Land and Building
35,000

Sundry Creditors

60000
(-) Depreciation @ 10%
-3500
31500
Bills Payable

17000
Plant and Machinery
49000




(-) Depreciation @ 5%
-2450
46550



Sundry debtors
63,000




(-) R.D.D. @ 5%
-3150
59850



Cash

12700


178530


178530



W.N. 1.Cash Account
Particulars
Amount
Particulars
Amount
To Balance b/d
9200


To Sanjay’s Capital A/c
2000


To Goodwill A/c
1500
By Balance c/d
12700

12700

12700


W.N. 2. Goodwill Account.
Particulars
Amount
Particulars
Amount
To Akash’ Capital A/c
1167
By Cash A/c
1500
To Suraj’s Capital
333



1500

1500

W.N. 3. Calculation of Sacrifice Ratio
          S.R. = O.R. – N.R.
Akash’s S.R. =
Suraj’s S.R. =
The Sacrifice Ratio of Old Partners is 2 : 7.