On 31st March, 2021 the Balance Sheet of Ram and Shyam who share profits and losses in the ratio of 3: 2 was as follows:

BALANCE SHEET OF RAM AND SHYAM as at 31st March, 2021

LiabilitiesAmount (Rs.)AssetsAmount (Rs.)
Creditors70,000 Cash at Bank25,000
General Reserve25,000Debtors – 1,62,500
Employees’ Provident Fund55,000Less: Provision for Doubtful debts(12,500)1,50,000
Ram – 1,50,000  Machinery 142,500
Shyam – 1,00,0002,50,000 

They decided to admit Mahesh on 1st April, 2021 for 1/5th share which Mahesh acquired wholly from Shyam on the following terms:(i) Mahesh shall bring Rs. 25,000 as his share of premium for Goodwill.
(ii) A debtor whose dues of Rs. 7,500 were written off as bad debt paid Rs. 5,000 in settlement.
(iii) A claim of Rs. 12,500 on account of workmen’s compensation was to be provided for.
(iv) Machinery were undervalued by Rs. 5,000. Stock was valued 10% more than its
market value.
(v) Mahesh was to bring in capital equal to 20% of the combined capitals of Ram and Shyam after all adjustments.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm.


Leave a Reply