Question

Bittu and Chintu were partners in a firm sharing profit and losses in the ratio of 4:3. Their Balance Sheet as at 31st March, 2024 was as follows: \includegraphics[scale=1.0]{2.png} On 1st April, 2024, Diya was admitted in the firm for \( \frac{1{7} \)th share in the profits on the following terms:

Hint:

In Admission with Proportionate Capital: 1. Perform all adjustments for revaluation, reserves, and goodwill for old partners. 2. Calculate the combined *adjusted* capital of the old partners. 3. Determine the combined *new* profit share of the old partners. 4. Calculate Total Capital of the new firm = (Combined Adjusted Capital) / (Combined New Share). 5. Calculate New Partner's Capital = Total Capital \( \times \) New Partner's Share.

Answer 1

Journal Entries for Admission of Diya

1. For Revaluation of Assets

Revaluation A/c Dr. 1,40,000
    To Fixed Assets A/c 1,40,000 
(Being fixed assets overvalued by Rs 1,40,000 as per the revaluation)

2. For Settlement of Creditors

Creditors A/c Dr. 4,20,000 
    To Bank A/c 4,20,000 
(Being creditors settled for Rs 4,20,000 in full settlement)

3. For Admission of Diya’s Share in Goodwill

Goodwill A/c Dr. 5,60,000 
    To Bittu’s Capital A/c 2,40,000 
    To Chintu’s Capital A/c 1,80,000 
    To Diya’s Capital A/c 1,40,000 
(Being goodwill brought in by Diya and shared among the old partners in their sacrificing ratio)

4. For Diya’s Capital Contribution

Bank A/c Dr. 4,20,000 
    To Diya’s Capital A/c 4,20,000 
(Being Diya’s proportionate capital contribution)

5. For Adjusting Capital Accounts to the New Profit Sharing Ratio

Bittu’s Capital A/c Dr. (Amount) 
Chintu’s Capital A/c Dr. (Amount) 
    To Diya’s Capital A/c (Amount) 
(Being capital accounts of partners adjusted to the new profit-sharing ratio of 3:3:1)