X and Y are partners in a LLP namely Alpha LLP sharing profits and losses in the ratio of 2:1. The Balance Sheet of the LLP firm as at 31 st March,…

CA Foundation · Accounting · PYQS · May 2026
X and Y are partners in a LLP namely Alpha LLP sharing profits and losses in the ratio of 2:1. The Balance Sheet of the LLP firm as at 31 st March, 2026 was as follows: Liabilities Amount (₹) Assets Amount (₹) Capital Accounts: Land and Building 1,40,000 -X 1,00,000 Plant and Machinery 60,000 -Y 80,000 Inventories 28,000 Profit and Loss Account 24,000 Trade Receivables 44,000 Bank Overdraft 60,000 Cash at Bank 18,000 Trade Payables 24,200 Outstanding Liability 1,800 Total 2,90,000 Total 2,90,000 Additional Information: (i) On 1 st April, 2026, they agreed to admit Z as a partner for 1/5 th share in future profits and losses. Z would introduce - 60,000 as his capital and would also bring in his share of goodwill of 18,000 in cash. It was agreed that the Goodwill Account would not appear in the books of the firm. (ii) The New profit-sharing ratio among the partners X, Y and Z would be8:4:3. (iii) It was decided to revalue the assets and liabilities as under: Land and Building - 1,75,000Plant and Machinery 50,000Inventories - 25,000 (iv) Trade payables amounting to 1,200 were considered as no longer payable. (v) Provision for doubtful debts is to be created @5% on Trade Receivables. (vi) Y had settled the Outstanding Liability in full by paying - 1,500 from his own bank account. The necessary entry for the same was not made in the books. (vii) The Capital accounts of the partners would be re-adjusted on the basis of the new profit-sharing arrangement and any excess or deficiency would be transferred to their Current accounts. You are required to prepare: (1) Revaluation Account; (2) Partners' Capital Accounts; (3) Balance sheet of the firm after admission of Z.

Suggested Answer and Working Notes:

In the books of Alpha LLP Revaluation A/c Liabilities ₹ Assets ₹ To Provision for Doubtful Debts 2,200 By Land and Building 35,000 To Plant & Machinery 10,000 By Trade payables 1,200 To Inventories 3,000 By Outstanding Liability 300 To Profit on revaluation X 14,200 Y 7,100 21,300 36,500 36,500 Partners’ Capital A/c Particulars X Y Z Particulars X Y Z To X Capital A/c 12,000 By balance b/d 1,00,000 80,000 To Y’s Capital A/c 6,000 By Bank -Capital 60,000 By Bank – Goodwill 18,000 By Profit and Loss A/c 16,000 8,000 To Y’s Current A/c 22,600 By Outstanding liabilities 1,500 To Balance c/d (WN - 1) 1,60,000 80,000 60,000 By Z’s Capital A/c 12,000 6,000 By Revaluation A/c 14,200 7,100 By X’s Current A/c 17,800 1,60,000 1,02,600 78,000 1,60,000 1,02,600 78,000 Balance Sheet of Alpha LLP as at 1 st April, 2026 (after admission) Liabilities ₹ Assets ₹ Capital Accounts: Land & Building 1,75,000 X 1,60,000 Plant & Machinery 50,000 Y 80,000 Inventories 25,000 Z 60,000 3,00,000 Trade Receivables 44,000 Y’s Current A/c 22,600 Less: Provision for Doubtful Debts 2,200 41,800 Bank Overdraft 60,000 Bank (₹ 18,000+60,000+18,000) 96,000 Trade Payables 23,000 X’s Current A/c 17,800 4,05,600 4,05,600 Working Notes: 1. Calculation of total Capital: Z’s contribution of 60,000 consists of1/5 th of capital. Therefore, total capital of firm should be - 60,000 x 5 = 3,00,000 which is divided among partners in the ratio of8:4:3 X's share = 3,00,000 X (8/15) = 1,60,000 Y's share = 3,00,000 X (4/15) = 80,000 Z's share = 3,00,000 X (3/15) = 60,000 2. Calculation of sacrificing ratio Partner New Share Old Share Difference X 8/15 - 2/3 = -2/15 Y 4/15 - 1/3 = -1/15 Z - 3/15 (gain) = 3/15 (gain)

Topics: Admission of a New Partner

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