Following is the Balance Sheet of Harsha and Versha'S Firm on 31st March, 2016. They Share Profit and Losses in the Ratio of 3 : 2. They Decided to Admit Asha on 1st April, 2016, - Book Keeping and Accountancy

Question

Following is the Balance sheet of Harsha and Versha's firm on 31st March, 2016. They share profit and losses in the ratio of 3 : 2.
Balance sheet as on 31st March, 2016

Liabilities	Amount (Rs.)	Assets	Amount (Rs.)
Capital A/c:		Land & building	2,00,000
Harsha	2,80,000	Furniture	76,000
Varsha	2,80,000	Sundry debtors	3,00,000
Sundry creditors	4,00,000	Stock	1,60,000
		Cash at bank	2,24,000
	9,60,000		9,60,000

They decided to admit Asha on 1st April, 2016, into partnership on the following terms:
1) Asha should bring Rs. 80,000 as her share of goodwill, which is to be retained in the business.
2) She should bring Rs. 1,00,000 as her capital for 1/4th share in future profits.
3) land and building to be valued at Rs. 2,40,000 and furniture be reduced by 10%.
4) A provision of 5% on debetors to be made for doubtful debts.
5) The stock is to be taken at a value of Rs. 2,00,000.
6) The excess of capital of Harsha and Varsha over their due proportion of sharing profits in the firm is to be transferred to their respective loan accounts.
Prepare :
Profit and Loss Adjustment Account, Partner's Capital Account and new Balance Sheet of the firm.

Ledger

Solution

In the books of Harsha and Varsha
Profit and Loss Adjustment Account

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Furniture	7,600	By Land and Building	40,000
To R.D.D	15,000	By Stock	40,000
To Profit on Revaluation A/c is transferred to partners capital A/c
Harsha's Capital A/c 34440
Varsha's Capital A,/c 22960	57,400
	80,000		80,000

Partner's Capital A/c

Particulars	Harsha	Versha	Asha	Particulars	Harsha	Versha	Asha
				By Balance b/d	280,000	280,000
Varsha's Loan A/c [Balancing Fig]		214,960		By Goodwill A/c	48,000	32,000
Harsha's Loan A/c [Balancing Fig.]	182,440			By Bank A/c			100,000
To Balance c/d [Working Note]	180,000	120,000	100,000	By Profit or Loss Adjustment A/c [Profit]	34,440	22,960

	362,440	334,960	100,000		362,440	334,960	100,000

Balance Sheet of New Firm

Liabilities	Amount	Amount	Assets	Amount	Amount
Sundry Creditors		400,000	Land & Building	200,000
Harsha's Loan A/c		182,240	(+) Appreciation	40,000	240,000
Varsha's Loan A/c		214,960	Furniture	76,000
			(-) Depreciation @ 10%	(7600)	68,400
Capital A/c [Working Note]			Sundry Debtors	300,000
Harsha	180,000		(-) R.D.D. @ 5 %	(15000)	285,000
Varsha	120,000		Stock	160,000
Asha	100,000	400,000	(+) Appreciation	40,000	200,000
			Bank Balance		404,000
		1197,400			1197,400

Bank A/c

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Balance b/d	224,000
To Goodwill A/c	80,000
To Asha's Capital A/c	100,000	By Balance c/d	404,000

	404,000		404,000

Goodwill A/c

Particulars	Amount (Rs.)	Amount (Rs.)	Particulars	Amount (Rs.)	Amount (Rs.)
To Harsha's Capital A/c	48,000		By Bank A/c		80,000
To Varsha's Capital A/c	32,000	80,000

		80,000			80,000

Working Note : Calculation of New Ratio and Proportionate Capital
Balance Ratio = 1 - Share Given to New Partner
Therefore, Balance Ratio = 1 - 1/4 = 3/4

Harsha's New Ratio = B.R. x O.R. = `3/4 xx 3/5 = 9/20`

Varsha's New Ratio = B.R. x O.R. = `3/4 xx 2/5 = 6/20`

Asha's New Ratio = `1/4 xx 5/5 = 5/20`

Therefore their New Ratio = 9 : 6 : 5
New Partner brought Rs. 1,00,000 as her new capital

Therefore, their proportionale capital are
Harsha's Capital = Rs. 1,80,000
Varsha's Capital = Rs. 1,20,000
Asha's Capital = Rs. 1,00.000

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Partnership Final Accounts

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