Skip to content
Question of 62
Q.

Mansi, Nishil and Naman are partners sharing profit and loss in the ratio of 4 : 3 : 3. Mansi retires on 31-3-2020. Balance-sheet of the firm on that day was as under:

Balance-Sheet

LiabilitiesAmt.(₹)AssetsAmt.(₹)
Capital Accounts: Mansi 8,000; Nishil 5,000; Naman 2,00015,000Goodwill1,000
General reserve2,000Land-Building6,000
Creditors8,000Furniture4,000
Bills payable2,000Stock6,600
Debtors9,000
Cash400
27,00027,000

Following conditions were decided at the time of retirement:

(1) Value of goodwill is ₹ 4,000.

(2) Value of fixed assets is to be appreciated by 20%.

(3) Stock is found overvalued by 10%.

(4) New profit-loss sharing ratio of Nishil and Naman is decided at 4 : 1.

(5) Amount due to Mansi is to be paid in cash and cash balance of ₹ 1,000 in the new firm is to be maintained. For this purpose Nishil and Naman brought cash in such a way as to make their capitals proportionate to their new profit sharing ratio.

Prepare necessary accounts and balance-sheet of the new firm.

Gujarat GsebGujarat Board (GSEB) HSC Commerce Board 2024Subjective· 8mImportance★★★★★
0% · 0/62 Questions
🔒 Locked · start free trial →

You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.

Start your 14-day free trial to unlock the full solution →

Revaluation profit Rs 1,400 (4:3:3); Mansi's dues Rs 10,560 paid in cash; Nishil brings 10,680, Naman 480; new capitals 14,400 : 3,600 = 4:1; Balance-Sheet total Rs 28,000.

Old ratio 4:3:3; new ratio Nishil : Naman = 4:1. Gain (New - Old): Nishil 4/5 - 3/10 = +5/10; Naman 1/5 - 3/10 = -1/10. So Nishil gains 5/10, Naman sacrifices 1/10.

Goodwill (value Rs 4,000): Existing goodwill Rs 1,000 written off old ratio 4:3:3 (Mansi 400, Nishil 300, Naman 300). Mansi's share 4,000 x 4/10 = 1,600 credited to her; Nishil (gain 5/10) debited 2,000; Naman (sacrifice 1/10) credited 400.

Revaluation Account:

Dr ParticularsRsCr ParticularsRs
To Stock (10% overvalued: 6,600 - 6,000)600By Fixed assets (20% of 10,000)2,000
To Profit: Mansi 560; Nishil 420; Naman 4201,400
2,0002,000

(Fixed assets = Land-Building 6,000 + Furniture 4,000 = 10,000; +20% = 2,000. Stock overvalued 10%: market = 6,600/1.1 = 6,000, fall 600.)

Partners' Capital Accounts:

ParticularsMansiNishilNamanParticularsMansiNishilNaman
To Goodwill (written off)400300300By Balance b/d8,0005,0002,000
To Mansi's Capital (goodwill)-2,000-By General reserve (4:3:3)800600600
To Cash (paid)10,560--By Revaluation (4:3:3)560420420
To Balance c/d-14,4003,600By Nishil & Naman (Mansi's goodwill)1,600-400
By Cash (brought in)-10,680480
10,96016,7004,08010,96016,7004,080
…

Unlock everything free for 14 days

  • Full step-by-step solutions
  • Concept-first explanations
  • Methods, shortcuts & mistakes
  • PYQ mapping + timed mock tests

Full access for 14 days. No credit card required.