Sure, let's solve the problem step-by-step.
### Step 1: Kiran's Capital and Goodwill
1. Kiran brought capital: ₹87,500
2. Kiran's goodwill brought in cash: ₹33,600
[tex]$3/5$[/tex] of the goodwill will be withdrawn by the old partners immediately.
- Amount withdrawn as goodwill: \(\frac{3}{5} \times 33,600 = 20,160\)
### Step 2: Market Value Adjustments
1. Revised stock market value: ₹28,000
2. Revised plant and machinery market value: ₹1,68,000
### Step 3: Bad Debts and Discount Reserves
Assume initial debtors amount: ₹35,000
1. Bad Debts Reserve: \(10\% \times 35,000 = 3,500\)
2. Discount Reserve: \(2\% \times 35,000 = 700\)
### Step 4: Creditors Payment
1. Amount payable to creditors: ₹42,000
### Step 5: Raising Value of Land and Building and Furniture
Assume initial values:
- Initial land and building value: ₹2,00,000
- Initial furniture value: ₹50,000
1. Revised land and building value after 15% increase: \(2,00,000 \times 1.15 = 2,30,000\)
2. Revised furniture value after 20% increase: \(50,000 \times 1.20 = 60,000\)
### Step 6: Outstanding Wages
1. Outstanding wages: ₹644
### Calculating Profit on Revaluation
Profit on revaluation calculation:
[tex]\[
\text{Revised value of Land and Building} - \text{Initial value of Land and Building} + \text{Revised value of Furniture} - \text{Initial value of Furniture} + \text{Revised stock market value} + \text{Revised plant and machinery market value} - \text{Bad Debts Reserve} - \text{Discount Reserve} - \text{Creditors}
\][/tex]
[tex]\[
(2,30,000 - 2,00,000) + (60,000 - 50,000) + 28,000 + 1,68,000 - 3,500 - 700 - 42,000 = 189,800
\][/tex]
### Capital Account Balances After Adjustments
#### Initial Partners' Capitals:
- Rahul initial capital: ₹2,00,000
- Raj initial capital: ₹3,00,000
#### Profit Distribution (Ratio 1:3):
- Total Profit on Revaluation: ₹189,800
- Rahul's share: \(\frac{189,800}{4} = 47,450\)
- Raj's share: \(\frac{189,800 \times 3}{4} = 142,350\)
#### Goodwill Withdrawn (Ratio 1:3):
- Total goodwill withdrawn: ₹20,160
- Rahul's share: \(\frac{20,160}{4} = 5,040\)
- Raj's share: \(\frac{20,160 \times 3}{4} = 15,120\)
#### Final Capital Balances:
1. Rahul: Initial capital + Revaluation Profit - Goodwill withdrawn
[tex]\[
2,00,000 + 47,450 - 5,040 = 2,42,410
\][/tex]
2. Raj: Initial capital + Revaluation Profit - Goodwill withdrawn
[tex]\[
3,00,000 + 142,350 - 15,120 = 4,27,230
\][/tex]
3. Kiran capital after goodwill and cash contribution:
[tex]\[
87,500
\][/tex]
### Cash Balance Calculation
[tex]\[
\text{Kiran capital} + \text{Kiran goodwill} - \text{Goodwill withdrawn} - \text{Creditors payment}
\][/tex]
[tex]\[
87,500 + 33,600 - 20,160 - 42,000 = 58,940
\][/tex]
### Balance Sheet Total Calculation
[tex]\[
\text{Cash balance} + \text{Land and Building} + \text{Furniture} + \text{Stock} + \text{Plant and machinery} - \text{Outstanding Wages} - \text{Bad Debts Reserve} - \text{Discount Reserve}
\][/tex]
[tex]\[
58,940 + 2,30,000 + 60,000 + 28,000 + 1,68,000 - 644 - 3,500 - 700 = 540,096
\][/tex]
The calculated values confirm the detailed steps for preparing necessary accounts and the balance sheet for the new firm.
