DHIRAJ AND NIRAJ ADMISSION OF PARTNER SUM NO 7 PART TWO

Following is the Balance Sheet of Dhiraj and Niraj Who Shared Profits and Losses Equally. - Book Keeping and Accountancy

Following is the Balance Sheet of Dhiraj and Niraj who shared profits and losses equally.

                  Balance Sheet as on 31^st March, 2013

Liabilities	Amount (Rs)	Assets	Amount (Rs)
Capital A/c’s		Plant and Machinery	45000
Dhiraj	125000	Land and Building	84000
Niraj	35000	Patents	3400
Creditors	86200	Stock	47800
Bills Payable	28,000	Furniture	10600
General Reserve	6800	Debtors	80000
		Cash	10200
	281000		281000

On 1^st April, 2013 they agreed to admit Suraj on the following terms and conditions:

1) Suraj to bring for 1/3^rd share in future profit in cash Rs 90,000 towards his capital.

2) The firms goodwill should be raised to Rs 90,000 and it is to be written off after Suraj admission in new profit ratio.

3) Plant and Machinery was found undervalued by 10% and Land and Building was found overvalued by 20%.

4) Stock to be increased by Rs 2,200 and furniture to be reduced to Rs 10,000/-

5) Out of creditors Rs 1,200 is no more payable.

6) The Capital A/c to be adjusted in new profit sharing ratio by opening the current accounts.

Prepare Revaluation A/c, Capital A/c and New Balance Sheet.

Absolutely! Let's solve this partnership admission problem. Here's a step-by-step solution:

1. Revaluation Account

Particulars	Amount (Rs)	Amount (Rs)
To Patents A/c (Overvaluation)	3,400
To Land and Building A/c (Overvaluation)	16,800
To Provision for Doubtful Debts (Creditors not payable)	1,200
To Furniture A/c (Depreciation)	600
By Plant and Machinery A/c (Undervaluation)		4,500
By Stock A/c (Increase)		2,200
By Profit on Revaluation (Dhiraj: Niraj - 1:1)		18,300

2. Partners' Capital Accounts

Particulars	Dhiraj (Rs)	Niraj (Rs)	Suraj (Rs)
To Revaluation A/c (Profit)	9,150	9,150	-
To Goodwill A/c (Write-off)	15,000	15,000	-
To Balance c/d	130,050	45,050	-
By Balance b/d	125,000	35,000	-
By Cash (Capital)	-	-	90,000
By Current A/c (Adjustment)	5,050	-10,050	-
Total	130,050	45,050	90,000

Notes:

• Suraj's share of goodwill: Rs.90,000 / 3 = Rs. 30,000 (written off in the new ratio of 1:1:1)
• Capital Adjustment Calculation:
  • Total Capital (Based on Suraj's Investment): Rs.90,000 * 3 = Rs. 270,000
  • Dhiraj's New Capital: Rs.270,000 / 3 = Rs.90,000
  • Adjustment for Dhiraj: Rs. 90,000 - Rs. 130,050 = -Rs. 40,050 (Debit Current A/c)
  • Adjustment for Niraj: Rs. 90,000 - Rs. 45,050 = Rs. 44,950 (Credit Current A/c)

3. New Balance Sheet

Liabilities	Amount (Rs)	Assets	Amount (Rs)
Capital A/cs:		Plant & Machinery	49,500
Dhiraj	130,050	Land & Building	67,200
Niraj	45,050	Patents	30,600
Suraj	90,000	Stock	50,000
Creditors	85,000	Furniture	10,000
Bills Payable	28,000	Debtors	80,000
General Reserve	6,800	Cash	102,000
Current A/cs:
Dhiraj	-40,050
Niraj	44,950
Total	399,800	Total	399,800

Let me know if you have any questions about specific calculations or concepts!