Rajesh and Ravi are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet at 31st March, 2019 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's 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 revaluation are made:
(a) Stock to decrease by 5%, (b) Provision for Doubtful is to be RS.500, (c) Furniture to decrease by 10%, (d) Building is valued at RS.40,000.
Show necessary Ledger Accounts and Balance Sheet of new firm.

Answer

Gain (Profit) on Revaluation-RS.3,650; Capital A/cs: Rajesh-RS.32,825; Ravi-RS.18,095; Raman-RS.12,730; Balance Sheet Total-RS.1,06,150.
Note: Altematively, Raman's share of goodwill RS.3,270 (unpaid amount of goodwill) can be debited to Raman's Currnet Account. In that sltuation Balances of Capital A/cs will be: Rajesh-RS.32,825; Ravi-RS.18,095; Raman-RS.16,000; Balance Sheet Total-RS.1,-09,420.

Explanation

(i) Calcuation of Hidden Goodwill:
`{:("A. Total Capital of the firm on the basis of Raman's ",RS.),("Capital (RS.1600xx10//2)","80,000"),(B."Whereas, Adjusted Capital of Rajesh (excluding goodwill)",),("=RS.29,000+RS.2,190(Gain (Profit) on Revaluation)","31,190"),("Adjusted Capital of Ravi (excluding goodwill)",),("=RS.15,000+RS.1,460(Gain(Profit)on Revaluation)","16,460"),("Raman's Capital",underline "16,000"),(,underline underline "63,650"),(C."Value of Hidden Goodwill (A-B) =RS.80,000-RS.63,650=RS.16,350".,):}`
(ii) Raman will be debited by his share of goodwill, i.e., RS.3,270 and Rajesh and Ravi will be credited in their sacrificing ratio, i.e., equally.