12th | Change in Profit-Sharing Ratio Among the Existing Partner | Question No. 26 To 27 | Ts Grewal Solution 2022-2023

Question 26:

Ram, Mohan, Sohan and Hari were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1. On 1st April, 2016, their Balance Sheet was as follows:

BALANCE SHEET OF RAM, MOHAN, SOHAN AND HARI as on 1st April, 2016
Liabilities		`	Assets	`
Capital A/cs:			Fixed Assets	9,00,000
Ram	4,00,000		Current Assets	5,20,000
Mohan	4,50,000
Sohan	2,50,000
Hari	2,00,000	13,00,000
Workmen Compensation Reserve		1,20,000



		14,20,000		14,20,000

From the above date, the partners decided to share the future profits in the ratio of 1 : 2 : 3 : 4. For this purpose the goodwill of the firm was valued at `1,80,000. The partners also agreed for the following:

(a) The Claim for workmen compensation has been estimated at ` 1,50,000.
(b) Adjust the capitals of the partners according to the new profit-sharing ratio by opening Partners' Current Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.

Answer:

Revaluation Account
Dr.		Cr.
Particulars	( `)	Particulars		( `)
Provision for Workmen Compensation Claim	30,000	Revaluation Loss
		Ram’s Capital A/c	12,000
		Mohan’s Capital A/c	9,000
		Sohan’s Capital A/c	6,000
		Hari’s Capital A/c	3,000	30,000

	30,000			30,000

Partners’ Capital Account
Dr.				Cr.
Particulars	Ram	Mohan	Sohan	Hari	Particulars	Ram	Mohan	Sohan	Hari
Revaluation A/c	12,000	9,000	6,000	3,000	Balance b/d	4,00,000	4,50,000	2,50,000	2,00,000
Ram’s Capital A/c			13,500	40,500	Sohan’s Capital A/c	13,500	4,500
Mohan’s Capital A/c			4,500	13,500	Hari’s Capital A/c	40,500	13,500
Current A/c’s	3,15,000	2,05,000			Current A/c’s			1,55,000	3,65,000
Balance c/d	1,27,000	2,54,000	3,81,000	5,08,000
	4,54,000	4,68,000	4,05,000	5,65,000		4,54,000	4,68,000	4,05,000	5,65,000

Balance Sheet
Liabilities		( `)	Assets		( `)
Capital A/c			Fixed Assets		9,00,000
Ram	1,27,000		Current Assets		5,20,000
Mohan	2,54,000		Current A/c
Sohan	3,81,000		Ram	3,15,000
Hari	5,08,000	12,70,000	Mohan	2,05,000	5,20,000
Current A/c
Sohan	1,55,000
Hari	3,65,000	5,20,000
Claim against WCF		1,50,000

		19,40,000			19,40,000

Working Notes

WN1: Calculation of Gaining/Sacrificing Ratio

Old Ratio 4:3:2:1

New Ratio 1:2:3:4

Sacrificing Ratio=Old Ratio-New Ratio

Sacrificing Ratio of Ram=4/10-1/10=3/10(sacrificing)

Sacrificing Ratio of Mohan=3/10-2/10=1/10(sacrificing)

gaining Ratio of Sohan=2/10-3/10=-1/10(gaining)

gaining Ratio of Hari=1/10-4/10=-3/10(gaining)

(a) Sohan will compensate Ram and Mohan in the ratio 3 : 1

(b) Hari will compensate Ram and Mohan in the ratio of 3 : 1

Adjustment for Goodwill

Sohan’s Capital A/c	Dr.	18,000
Hari’s Capital A/c	Dr.	54,000
To Ram’s Capital A/c			54,000
To Mohan’s Capital A/c			18,000
(Being Sohan and Hari will compensate Ram and Mohan in their gaining ratio)

WN2: Calculation of Adjusted Capital

Ram = 4,54,000 – 12,000 = ` 4,42,000

Mohan = 4,68,000 – 9,000 = ` 4,59,000

Sohan = 2,50,000 – 24,000 = ` 2,26,000

Hari = 2,00,000 – 57,000 = ` 1,43,000

Total Combined Capital = 12,70,000

WN3: Calculation of New Capital

Ram=12,70,000×1/10=1,27,000

Mohan=12,70,000×2/10=2,54,000

Sohan=12,70,000×3/10=3,81,000

Hari=12,70,000×4/10=5,08,000

Question 27:

Suresh, Ramesh, Mahesh and Ganesh were partners in a firm sharing profits in the ratio of 2 : 2 : 3 : 3. On 1st April, 2016, their Balance Sheet was as follows:

BALANCE SHEET OF SURESH, RAMESH, MAHESH AND Ganesh as on 1st April, 2016
Liabilities		( `)	Assets	( `)
Capital A/cs:			Fixed Assets	6,00,000
Suresh	1,00,000		Current Assets	3,45,000
Ramesh	1,50,000
Mahesh	2,00,000
Ganesh	2,50,000	7,00,000
Sundry Creditors		1,70,000
Workmen Compensation Reserve		75,000


		9,45,000		9,45,000

From the above date, the partners decided to share the future profits equally. For this purpose the goodwill of the firm was valued at ` 90,000. It was also agreed that:
(a) Claim against Workmen Compensation Reserve will be estimated at ` 1,00,000 and fixed assets will be depreciated by 10%.
(b) The Capitals of the partners will be adjusted according to the new profit-sharing ratio. For this, necessary cash will be brought or paid by the partners as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.

Answer:

Revaluation Account
Dr.		Cr.
Particulars	( `)	Particulars		( `)
Depreciation on Fixed Assets A/c	60,000	Revaluation Loss
Provision for Claim against WCF	25,000	Suresh’s Capital A/c	17,000
		Ramesh’s Capital A/c	17,000
		Mahesh’s Capital A/c	25,500
		Ganesh’s Capital A/c	25,500	85,000

	85,000			85,000

Partners’ Capital Account
Dr.				Cr.
Particulars	Suresh	Ramesh	Mahesh	Ganesh	Particulars	Suresh	Ramesh	Mahesh	Ganesh
Revaluation A/c	17,000	17,000	25,500	25,500	Balance b/d	1,00,000	1,50,000	2,00,000	2,50,000
Mahesh's Capital A/c	2,250	2,250	-	-	Suresh’s Capital A/c	-	-	2,250	2,250
Ganesh's Capital A/c	2,250	2,250	-	-	Ramesh’s Capital A/c	-	-	2,250	2,250
Cash A/c	-	-	25,250	75,250	Cash A/c	75,250	25,250	-	-
Balance c/d	1,53,750	1,53,750	1,53,750	1,53,750
	1,75,250	1,75,250	2,04,500	2,54,500		1,75,250	1,75,250	2,04,500	2,54,500

Balance Sheet
Liabilities		( `)	Assets	( `)
Capital A/c			Fixed Assets (Less depreciation)	5,40,000
Suresh's Capital A/c	1,53,750		Current Assets	3,45,000
Ramesh's Capital A/c	1,53,750
Mahesh's Capital A/c	1,53,750
Ganesh's Capital A/c	1,53,750	6,15,000
Claim against WCF		1,00,000
Sundry Creditors		1,70,000
		8,85,000		8,85,000

Working Notes

WN1:
Calculation of Gaining/Sacrificing Ratio

Adjustment for Goodwill

Suresh’s Capital A/c	Dr.	4,500
Ramesh’s Capital A/c	Dr.	4,500
To Mahesh’s Capital A/c			4,500
To Ganesh’s Capital A/c			4,500
(Gaining partners compensate sacrificing partners)

WN2: Calculation of Adjusted Capital
Suresh = 1,00,000 – 21,500 = ` 78,500
Ramesh = 1,50,000 – 21,500 = ` 1,28,500
Mahesh = 2,04,500 – 25,500 = ` 1,79,000
Ganesh = 2,54,500 – 25,500 = ` 2,29,000
Total Combined Capital = 6,15,000

WN3: Calculation of New Capital
Suresh=6,15,000×1/4=1,53,750