DHIRAJ AND NIRAJ ADMISSION OF PARTNER SUM NO 7

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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 31st 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 28000 Furniture 10600
General Reserve 6800 Debtors 80000
Cash 10200
281000 281000

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

1) Suraj to bring for 1/3rd 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!

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