43 :- Lisa, Monika and Nisha were partners in a firm sharing profits and losses in the ratio of 2:2:1. On 31st March 2025, their Balance Sheet was as follows
On 31st March, 2025, Monika retired from the firm and the remaining partners decided to carry on the business. It was agreed that :
(i) Land and Building be appreciated by Rs 2,40,000 and Machinery be depreciated by 10%
(ii) 50% of the stock was taken over by the retiring partner at book value.
(iii) Provison for doubtful debts was to be made at 5% on debtors.
(iv) Goodwill of the firm be valued at Rs 3,00,000 and Monika’s share of goodwill be adjusted in the accounts of Lisa and Nisha.
(v) The total capital of the new firm be fixed at Rs 27,00,000 which will be in the proportion of the new profit – sharing ratio of Lisa and Nisha. For this purpose, Current Accounts of the partners were to be opened.
Prepare Revaluation account, Partner’s capital accounts and the balance sheet of the reconstituted firm on Monika’s retirement.
Solution :-
WORKING NOTES :-
Old ratio = 2:2:1
Gaining ratio = 2:1
(a) Calculation of new profit sharing ratio
Lisa = 2/5 + 2/3 = 16/15
Nisha = 1/5 + 1/3 = 8/15
New profit sharing ratio = 2:1
(b) Calculation of share of goodwill
Monika’s share = 3,00,000 x 2/5 = Rs 1,20,000
Lisa’s share = 1,20,000 x 2/3 = Rs 80,000
Nisha’s share = 1,20,000 x 1/3 = Rs 40,000
(c) Calculation of new capitals of Partners
Lisa = 27,00,000 x 2/3 = Rs 18,00,000
Nisha = 27,00,000 x 1/3 = Rs 9,00,000