Ownclasses

Sahaj and Nimish are partners in a firm. They share profits and losses in the ratio of 2:1. Since both of them are especially abled, sometimes they find it difficult to run the business on their own. Gauri, a common friend decides to help them. Therefore, they admitted her into partnership for a 1/3rd share. She brought her share of goodwill in cash and proportionate capital. At the time of Gauri’s admission, the Balance sheet of Sahaj and Nimish was as under:


It was decided to:
(a) Reduce the value of stock by Rs 5,000.
(b) Depreciate furniture by 10% and appreciate machinery by 5%.
(c) Rs 3,000 of the debtors proved bad. A provision of 5% was to be created on Sundry Debtors for doubtful debts.
(d) Goodwill of the firm was valued at Rs 45,000.
Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the reconstituted firm. Identify the value being conveyed in the question. 

Answer




Working Notes:

1) Calculation of Gauri’s Share of Goodwill
Value of Firm’s Goodwill = 45,000
Gauri’s share of goodwill = 45000* 1 / 3 = 15,000 

2) Calculation of new profit sharing ratio:
Old Ratio = 2:1
Gauri is admitted for 1/3rd share                         
Sahaj’s new profit share = 2 / 3 * 2 / 3 = 4 / 9
Nimish’s new profit share = 2 / 3 * 1 / 3 = 2 / 9
Gauri’s profit share = 1 / 3 = 3 / 9
New ratio =4:2:3 

3) Calculation of Gauri’s Capital:
Sahaj’s Capital         = 142433
Nimish’s Capital       =   91217
Capital for 2/3 Share = 233650
Total Capital= 233650 x 3/2
Gauri’s Capital = 233650 x 3/2 x 1/3 = 116825 

The following are the values involved
a. Valuing friendship and helping friends
b. Sympathy and sensitivity towards differently abled individuals.