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: 
Sun brings ₹6,00,000 as capital but could not bring goodwill in cash. 
Goodwill is valued at ₹4,00,000. 
Provision on debtors is required @10%. 
Interest on Bank Loan for 6 months is due @12% p.a. 
Liability to workers is ₹15,000 against Workmen Compensation Reserve. 
Unrecorded stock of ₹40,000 is taken by Star at ₹38,000. 
Prepare Revaluation Account and Partners’ Capital Accounts.

Hint:

On admission of a partner, revaluation profit or loss and reserves are adjusted among old partners in the old profit-sharing ratio.

Answer 1

Old Profit Sharing Ratio = 3 : 2 (i) Revaluation Account 

Loss on Revaluation = ₹51,000 \[ \text{Star’s Share} = \frac{3}{5} \times 51,000 = 30,600 \] \[ \text{Moon’s Share} = \frac{2}{5} \times 51,000 = 20,400 \] (ii) Adjustment of Goodwill Sun’s share of goodwill: \[ 4,00,000 \times \frac{1}{10} = ₹40,000 \] Sacrificing Ratio = Old Ratio = 3 : 2 \[ \text{Star} = 24,000 ; \text{Moon} = 16,000 \] (iii) Distribution of General Reserve \[ \text{Star} = \frac{3}{5} \times 1,00,000 = 60,000 \] \[ \text{Moon} = \frac{2}{5} \times 1,00,000 = 40,000 \] (iv) Partners’ Capital Accounts 

Sun’s Capital Account