32 :- Kanika, Disha and Kabir were partners sharing profits in the ratio of 2:1:1. On 31st March, 2025, their balance sheet was as under
Kanika retired on 1st April 2025. For this purpose, the following adjustments were agreed upon
(a) Goodwill of the firm was valued at 2 years purchase of average profits of three completed years preceding the date of retirement. The profits for the year ended 31st March
2022 was loss of 20,000; 2023 was Rs 1,00,000 and for 2024 was Rs 1,30,000
(b) Fixed assets were to be increased to Rs 3,00,000
(c) Stock was to be valued at 120%
(d) The amount payable to Kanika was transferred to her loan account.
Prepare Revaluation account, Capital Accounts of the partners and the Balance Sheet of the reconstituted firm.
Solution :-
WORKING NOTES :-
(i) Calculation of Goodwill of the firm
Average profits = 1,00,000 + 1,30,000 – 20,000/3
= 2,10,000/3 = Rs 70,000
Goodwill = 70,000 x 2 = Rs 1,40,000
(ii) Calculation of Gaining/sacrificing share
New share – old share
Disha = 1/2 – 1/4 = 1/4
Kabir = 1/2 – 1/4 = 1/4
(iii) Calculation of share of goodwill
Kanika = 2/4 x 1,40,000 = Rs 70,000
Disha = 1/4 x 1,40,000 = Rs 35,000
Kabir = 1/4 x 1,40,000 = Rs 35,000