Vasu and Viraj Share Profits and Losses in the Ratio of 3:2 respectively Their Balance Sheet as on 31st March 2019 was as under

Balance Sheet as on 31st March,2019. 

Liabilities	Amount	Assets	Amount
Sundry Creditors	45,000	Cash at bank	750
General reserve	30,000	Sundry Debtors	66,750
Capital:		Stock	25,500
vasu	1,08,000	Investments	36,000
Viraj	72,000	Plant	90,000
		Building	36,000
	2,55,000		2,55,000

They admit Hari into Partnership on 1.4.2019 the terms being that:

1. He Shall have to bring in 460,000 as his Capital for 1/4 share in future profits.

2. Value of Goodwill  of the firm is to be fixed at the average profits for the last years.

The Profit were.

2309-2010 448,000

2010-2011 ₹81,000

2011-2012 ₹73,500

Hari is unable to bring that value of the gOODWIL IN CASH. IT IS DECIEDED TO RAISE THE goodwill IN THE BOOKS OF accounts.

3. reserve for Doubtful Debts is to be created at 1,500.

4. Closing stock is valued at 22,500..

5. Plant and Building is to be depreciation by 5%.

Prepare Profit and Losses Adjustment A/c, Capital Account of Partners and balance Sheet of the New Firm .

Solution:
In the Books of Vasu, Viraj and Hari Partnership Firm.

Revaluation Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To R.D.D.	1,500
To Stock	3,000
To Plant	4,500
To Building	1,800
		By Loss	10,800
	10,800		10,800

Partner's Capital Account

Dr. Cr.

Particulars	Vasu	Viraj	Hari	Particulars	vasu	Viraj	Hari
				By Balance b/d	1,08,000	72,000
To Revaluation loss	6,480	4,320		By General reserve	18.000	12,000
				By Balance			60,000
To Balance	1,60,020	1,06,680	60,000	By Goodwill	40,500	27,000
	1,66,500	111,000	60,000		1,66,000	1,11,000	60,000

 

Balance Sheet as on 1.4.2019

Cr. Dr.

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital A/c:			Sundry Debtors	66,750
Vasu	1,60,020		(-) R.D.D.	1,500	65,250
Viraj	1,06,680		Sock	25,500
Hari	60,000	2,72,700	(-) Revalued	3,000	22,500
			Investment		36,000
			Plant	90,000
Creditors		45,000	(-) Depreciation	4,500	85,500
			Building	36,000
			(-) Depreciation	1,800	34,200
			Goodwill		67,500
			Cash		60,750
		3,71,700			3,71,700

Working Note:

Goodwill Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
TO Vasu	40,500
To Viraj	27,000	By Balance	67,500
	67,500		67,500

Cash/ Bank Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Balance b/d	750
To Hari Capital A/c	60,000
		By Balance	60,750
	60,750		60,750

✱ Calculation of Ratio:

New Ratio = old ratio * Remaining Share 

Vasu = 3/5 *3/4 = 9/20

Viraj= 2/5 * 3/4 = 6/20

✱Cash Bought by New Partner in Cash 

Cash A/c  Dr.      60,000

     To Hari Capital Account      60,000

✱ Goodwill Raised 

Goodwill A/c    Dr.     67,500

    To Old Partners Capital a/c      67,500