Ramesh, Dinesh and Mahesh were partners sharing profits and losses in the ratio of 5 : 2 : 3. Their balance sheet as on 31st March 2020 was as follows:
| Balance Sheet as on 31st March 2020 | | | | |
| --- | --- | --- | --- | --- |
| Liabilities | Amount (₹) | Assets | Amount

Question

Ramesh, Dinesh and Mahesh were partners sharing profits and losses in the ratio of 5 : 2 : 3. Their balance sheet as on 31st March 2020 was as follows:
| Balance Sheet as on 31st March 2020 |  |  |  |  |
| --- | --- | --- | --- | --- |
| Liabilities | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Capital Accounts: |  | Plant and Machinery |  | 42,000 |
| Ramesh | 46,000 | Building |  | 50,000 |
| Dinesh | 42,000 | Stock |  | 30,400 |
| Mahesh | 27,600 | Debtors | 26,800 | 26,000 |
| Creditors | 30,000 | Less: R.D.D. | 800 |  |
| Bills Payable | 11,200 | Bank |  | 32,400 |
| General Reserve | 24,000 |  |  |  |
|  | 1,80,800 |  |  | 1,80,800 |
Dinesh retired from business on 1
st
April 2020 on the following terms:
The assets were revalued as under:
Stock ₹ 38,000
The building is appreciated by 10%.
Plant and Machinery is to be depreciated by 10%.
R.D.D. is increased up to ₹ 1,000.
The goodwill of the retiring partner is valued at 18,000, and the remaining partners decided that the goodwill be written off in their new ratio, which will be 5 : 3.
Amount due to Dinesh is to be transferred to his loan account.
Prepare:
Revaluation Account
Partners’ Capital Account and
Balance Sheet of New Firm.

Accepted Answer

>

> [!TLDR]
> Revaluation gives a **profit of ₹8,200** (5:2:3). General Reserve ₹24,000 and revaluation profit are credited to all three partners; Dinesh's share of goodwill ₹18,000 is credited to him and debited to Ramesh & Mahesh in the new ratio 5:3. Dinesh's total ₹66,440 is transferred to his Loan A/c. The new Balance Sheet of Ramesh and Mahesh totals **₹1,89,000**.
>
> **Working Note 1 — Revaluation Account**
>
> | Dr — Particulars | Amount (₹) | Cr — Particulars | Amount (₹) |
> | --- | --- | --- | --- |
> | To Plant & Machinery A/c (10% of 42,000) | 4,200 | By Stock A/c (38,000 − 30,400) | 7,600 |
> | To R.D.D. A/c (1,000 − 800) | 200 | By Building A/c (10% of 50,000) | 5,000 |
> | To Partners' Capital A/c (Profit): | | | |
> |   Ramesh 4,100 / Dinesh 1,640 / Mahesh 2,460 | 8,200 | | |
> | **Total** | **12,600** | **Total** | **12,600** |
>
> Profit = 12,600 − 4,400 = **₹8,200**, shared 5:2:3 → Ramesh 4,100, Dinesh 1,640, Mahesh 2,460.
>
> **Working Note 2 — General Reserve** ₹24,000 in 5:2:3 → Ramesh 12,000, Dinesh 4,800, Mahesh 7,200.
>
> **Working Note 3 — Goodwill of retiring partner** = ₹18,000, credited to Dinesh and written off by the continuing partners in the **new ratio 5:3** → Ramesh 18,000 × 5/8 = ₹11,250; Mahesh 18,000 × 3/8 = ₹6,750.
>
> **Partners' Capital Accounts**
>
> | Particulars | Ramesh (₹) | Dinesh (₹) | Mahesh (₹) | Particulars | Ramesh (₹) | Dinesh (₹) | Mahesh (₹) |
> | --- | --- | --- | --- | --- | --- | --- | --- |
> | To Dinesh's Capital A/c (goodwill 5:3) | 11,250 | — | 6,750 | By Balance b/d | 46,000 | 42,000 | 27,600 |
> | To Dinesh's Loan A/c | — | 66,440 | — | By General Reserve A/c | 12,000 | 4,800 | 7,200 |
> | To Balance c/d | 50,850 | — | 30,510 | By Revaluation A/c (Profit) | 4,100 | 1,640 | 2,460 |
> | | | | | By Ramesh & Mahesh Capital A/c (goodwill) | — | 18,000 | — | …

Balance Sheet as on 31st March 2020
Liabilities	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital Accounts:		Plant and Machinery		42,000
Ramesh	46,000	Building		50,000
Dinesh	42,000	Stock		30,400
Mahesh	27,600	Debtors	26,800	26,000
Creditors	30,000	Less: R.D.D.	800
Bills Payable	11,200	Bank		32,400
General Reserve	24,000
	1,80,800			1,80,800
Dinesh retired from business on 1
st
April 2020 on the following terms:
The assets were revalued as under:
Stock ₹ 38,000
The building is appreciated by 10%.
Plant and Machinery is to be depreciated by 10%.
R.D.D. is increased up to ₹ 1,000.
The goodwill of the retiring partner is valued at 18,000, and the remaining partners decided that the goodwill be written off in their new ratio, which will be 5 : 3.
Amount due to Dinesh is to be transferred to his loan account.
Prepare:
Revaluation Account
Partners’ Capital Account and
Balance Sheet of New Firm.

Dr — Particulars	Amount (₹)	Cr — Particulars	Amount (₹)
To Plant & Machinery A/c (10% of 42,000)	4,200	By Stock A/c (38,000 − 30,400)	7,600
To R.D.D. A/c (1,000 − 800)	200	By Building A/c (10% of 50,000)	5,000
To Partners' Capital A/c (Profit):
Ramesh 4,100 / Dinesh 1,640 / Mahesh 2,460	8,200
Total	12,600	Total	12,600

Particulars	Ramesh (₹)	Dinesh (₹)	Mahesh (₹)	Particulars	Ramesh (₹)	Dinesh (₹)	Mahesh (₹)
To Dinesh's Capital A/c (goodwill 5:3)	11,250	—	6,750	By Balance b/d	46,000	42,000	27,600
To Dinesh's Loan A/c	—	66,440	—	By General Reserve A/c	12,000	4,800	7,200
To Balance c/d	50,850	—	30,510	By Revaluation A/c (Profit)	4,100	1,640	2,460
				By Ramesh & Mahesh Capital A/c (goodwill)	—	18,000	—

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