Amit, Balan and Chander were partners in a firm sharing profits in the proportion of 1/2, 1/3 and 1/6 respectively. Chander retired on 1st April, 2014. The Balance Sheet of the firm on the date of Chander’s retirement was as follows: It was agreed that: (i) Goodwill be valued at ₹ 27,000. (ii) Depreciation of 10% was to be provided on Machinery. (iii) Patents were to be reduced by 20%. (iv) Liability on account of Provident Fund was estimated at ₹ 2,400. (v) Chander took over Investments for ₹ 15,800. (vi) Amit and Balan decided to adjust their capitals in proportion of their profit-sharing ratio by opening Current Accounts. Prepare Revaluation Account and Partners Capital Accounts on Chander’s retirement.

Amit, Balan and Chander were partners in a firm sharing profits in the

1.	Amit, Balan and Chander were partners in a firm sharing profits in the proportion of 1/2, 1/3 and 1/6 respectively. Chander retired on 1st April, 2014. The Balance Sheet of the firm on the date of Chander’s retirement was as follows: It was agreed that: (i) Goodwill be valued at ₹ 27,000. (ii) Depreciation of 10% was to be provided on Machinery. (iii) Patents were to be reduced by 20%. (iv) Liability on account of Provident Fund was estimated at ₹ 2,400. (v) Chander took over Investments for ₹ 15,800. (vi) Amit and Balan decided to adjust their capitals in proportion of their profit-sharing ratio by opening Current Accounts. Prepare Revaluation Account and Partners Capital Accounts on Chander’s retirement.
Answer» information is given regarding the SHARE ACQUIRED by AMIT and Balan, therefore, their gaining RATIO is same as their new profit sharing ratio i.e. 3 : 2.Explanation:Adjustment of Goodwill Chander's share of Goodwill = 27,000×Amit will pay = 4,500×Balan will pay =4,500×Adjustment of Capital ADJUSTED Old Capital of Amit =44,800 (40,000+4,500+300)−2,700=Rs 42,100Adjusted Old Capital of Balan=39,700 (36,500+3,000+200)−1,800=Rs 37,900Total Adjusted Capital=42,100+37,900=Rs 80,000New Profit Sharing Ratio=3:2Amit's New Capital=80,000×35=Rs 48,000Balan's New Capital=80,000×25=Rs 32,000Since, here no information is given regarding the share acquired by Amit and Balan, therefore, their gaining ratio is same as their new profit sharing ratio i.e. 3 : 2.

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