Balance sheet of X and Y, who share profits and losses as 5:3

30 :-  Balance sheet of X and Y, who share profits and losses as 5:3 as at 1^st April 2025, is:

On the above date, they decided to change their profit sharing ratio to 3 : 5 and agreed upon the following:
a) Goodwill be valued on the basis of two year’s purchse of the average profit of the last three years. Profits for the years ended 31st March, are: 2023 – Rs 7,500; 2024 – Rs 4,000; 202 – Rs 6,500.
b) Machiney and stock be revalued at Rs 45,000 and Rs 8,000 respectively.
c) Claim on account of workmen compensation is Rs 6,000.
Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of the new firm.

Solution :-

WORKING NOTES :-
(i) Calculation of gaining/sacrificing ratio
Old ratio = 5:3
New ratio = 3:5
X = 5/8 – 3/8 = 2/8 (sacrifice)
Y = 3/8 – 5/8 = -2/8 (gain)

(ii) Calculation of goodwill
Average profits = 7,500 + 4,000 + 6,500/3 = 18,000/3 = Rs 6,000
Goodwill = 6,000 x 2 = Rs 12,000