63 :- Rajesh and Ravi are partners sharing profits in the ratio of 3:2. Their balance sheet as at 31st March, 2025 stood as
Raman is admitted as a new partner introducing a capital of Rs 16,000. The new profit sharing ratio is decided as 5:3:2. Raman is unable to bring in any cash for goodwill. So, it is decided to value the goodwill on the basis of Raman’s share in the profits and the capital contributed by him. Following revaluations were made.
(a) Stock to decrease by 5%
(b) Provisions for doubtful debts is to be Rs 5,000
(c) Furniture to decrease by 10%
(d) Building is valued at Rs 40,000.
Show necessary ledger accounts and the balance sheet of new firm.
Solution :-
WORKING NOTES :-
(a) Calculation of gaining/sacrificing share
Rajesh = 3/5 – 5/10 = 1/10
Ravi = 2/5 – 3/10 = 1/10
Sacrificing ratio is 1:1
(b) Calculation of hidden goodwill
Total capital of the firm as per Raman’s share = 16,000 x 10/2 = Rs 80,000
Total capital of the firm = 31,190 + 16,460 + 16,000 = Rs 63,650
Hidden goodwill = 80,000 – 63,650 = Rs 16,350
(c) Calculation of partner’s share of goodwill
Raman’s share of goodwill = 16,350 x 2/10 = Rs 3,270
Rajesh’s share of goodwill = Rs 1,635
Ravi’s share of goodwill = Rs 1,635