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| 1. |
The Balance Sheet of X, Y and Z who were sharing profits in the ratio of 5 : 3 : 2 as at 31st March, 2018 is as follows: X retired on 31st March, 2018 and Y and Z decided to share profits in future in the ratio of 3 : 2 respectively. The other terms on retirement were: (a) Goodwill of the firm is to be valued at ₹ 80,000. (b) Fixed Assets are to be depreciated to ₹ 57,500. (c) Make a Provision for Doubtful Debts at 5% on Debtors. (d) A liability for claim, included in Creditors for ₹ 10,000 is settled at ₹ 8,000. The amount to be paid to X by Y and Z in such a way that their Capitals are proportionate to their profit-sharing ratio and leave a balance of ₹ 15,000 in the Bank Account. Prepare Profit and Loss Adjustment Account and Partners Capital Accounts. |
| Answer» TION of Gaining Ratio: Old Ratio (X, Y and Z) = 5:3:2 New Ratio (Y and Z) = 3:2 Gaining Ratio = New Ratio – Old Ratio Hence, gaining ratio is 3 : 2. Adjustment of Goodwill Total Goodwill of the Firm = 80,000 To be borne by Gaining PARTNERS in their Gaining Ratio i.e. 3:2 Adjustment of Capital X’s Capital before adjustment = 1,19,750 Y’s Capital before adjustment = 61,850 Z’s Capital before adjustment = 32,900 Total Capital of New Firm = X's Capital+Y's Capital+Z's Capital+Closing balance of Bank Account−Available Bank Balance = 1,19,750+61,850+32,900+15,000−32,000 = Rs 1,97,500 New profit SHARING ratio = 3:2 | |