Example : Gaurav, Rahul and Saurav were carrying on a business in partnership sharing profits and losses in the ratio of 3 : 2 : 1. Their Balance Sheet as at March 31, 2012 was as follows:
Balance Sheet
as on March 31, 2012
Liabilities
Amount
(Rs)
Assets
Amount
(Rs)
Capital A/cs:
Land and Building
40,000
Gaurav
56,500
Goodwill
12,000
Rahul
29,000
Plant and Machinery
30,000
Saurav
22,500
1,08,000
Stock
10,000
Investment Fluctuation Fund
18,000
Debtors
30,000
Sundry Creditors
25,000
Less: Provision for Doubtful Debts
(2,000)
28,000
Investments (Market Value Rs 18,000)
21,000
Cash
10,000
1,51,000
1,51,000
Saurav desired to retire from the firm. Remaining partners decided to continue the business on following terms:
- Goodwill of firm valued at Rs 30,000.
- Stock is overvalued by Rs 4,000 and all debtors were considered to be good.
- Land and Building appreciated by 5% and Plant and Machinery depreciated by 20%.
- Capital of the new firm was fixed at Rs 80,000. It is decided to adjust capital of the remaining partners as per their new profit-sharing ratio.
Prepare Revaluation Account, Partners Capital Accounts, Cash Account and Balance Sheet of the new firm.
WN2 Adjustment of Capital
Total Capital of New Firm (after Sauravs retirement) =Rs 80,000
Particulars
Gaurav
Rahul
New Capital Balance
48,000
32,000
Adjusted Old Capital Balance
(52,000)
(26,000)
Cash brought in by/paid to the partner
4,000
(Dr.)
6,000
(Cr.)
pleaase correct it the oepning balances are different according to the question given
gaurav old capital is 56500
rahul old capital is 29000
as in ur solution set it is represented as 52000 and 26000 as old capital
PLEASE EXPLAIN ME HOW DID IT HAPPEN ??
The solution is absolutely correct. Let us understand why old capital is taken as 52,000 and 26,000.
In this question, the new capital of the firm is given as 80,000 which is to be divided in their profit sharing ratio between Gaurav and Rahul. The new capital comes out to be Rs 48,000 and Rs 32,000 respectively. Till this point, everything is clear to you. Right?
Now, to ascertain the amount brought in by the or withdrawn by Gaurav and Rahul is calculated by subtracting the adjusted old capital balance.
Adjusted old Capital balance = Old Capital + Amount credited to Partner's Capital A/c - Amount debited to Partner's Capital A/c
In this question,
Gaurav's adjusted capital = 56,500 + 7,500 (IFF) - 6,000 (Goodwill) - 3,000 (Revaluation Loss) - 3,000 (Saurav's Capital) = 52,000
Similarly, Rahul's adjusted capital = 29,000 + 5,000 - 4,000 - 2,000 - 2,000 = 26,000
Therefore, these amounts are subtracted from the new capital balance.
Also, you can see the video provided below the example for further help.
Hope this clarifies your doubt.
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