Question

Star and Moon were partners in a firm sharing profits in the ratio of 3 : 2. On 31st March, 2024, the Balance Sheet of the firm was as follows: 

They admitted 'Sun' into partnership on 1st April, 2024 for 1/10 share. It was agreed as follows: 
(a) 'Sun' brings ₹6,00,000 for his share of capital but could not bring goodwill in cash. 
(b) Goodwill is valued at ₹4,00,000. 
(c) Provision on debtors is needed 10%. 
(d) Interest on Bank Loan for 6 months is due @ 12% p.a. 
(e) Liability to workers is ₹15,000 against Workmen Compensation Reserve. 
(f) Unrecorded stock ₹40,000 is taken by Star at ₹38,000. 
Prepare Revaluation Account and Partners' Capital Account. 
 

Hint:

Always adjust the capital accounts when a new partner is admitted, including any goodwill adjustments, reserves, and revaluation of assets.

Answer 1

Step 1: Calculate the Total Capital of the Firm. 
Total Capital before admission: \[ \text{Total Capital} = 8,00,000 + 6,00,000 = 14,00,000 \] Sun’s share of capital = 1/10th of total capital: \[ \text{Sun's Capital} = \frac{1}{10} \times 27,50,000 = 2,75,000 \] Hence, Sun’s capital is ₹2,75,000. Since Sun brings ₹6,00,000 for capital but no goodwill, the excess amount of ₹3,25,000 is credited to his capital account. Step 2: Prepare Revaluation Account. 
Revaluation Account 

Step 3: Partners’ Capital Accounts. 
Partners' Capital Account (Star, Moon, and Sun)