Please solve this qestion .........
Ram and Rahim were working in partnership sharing profits equally. On 31st
December, 2008, Ram decided to retire and in his place it was decided that Suresh,
his son, would be admitted as a partner from 1 January, 2009 and his share in
profits would be one third.
Balance Sheet of the firm as at 31st December, 2008 is given below :
Liabilities Rs. Assets Rs.
Sundry Creditors 14,700 Goodwill 15,000
Capital : Land & Buildings 40,050
Ram 54,300 Motor Car 12,000
Rahim 48,000 Furniture 9,300
Sundry Debtors 24,150
Cash and Bank 16,500
1,17,000 1,17,000
It was further decided as follows: (a) The goodwill should be raised to Rs. 20,000 (b) the
Motor Car would be taken over by Ram at its book value. (c) The value of Land and
Building would be increased by Rs. 8,280 (d) Rahim and Suresh would introduce
sufficient capital to pay off Ram to leave thereafter a sum of Rs. 7,350 as cash on
hand/Bank in a manner that the capital of the new partners will be in proportion to their
profit sharing ratio. (e) The capital payable by Suresh was to be gifted by his father,
Ram. (f) The new partners decided not to show goodwill as an asset.
Show the resultant effect of the above arrangements in partners’ Capital Accounts and
Balance Sheet after the admission of Suresh.
Thanks
CAclubindia
