Asha, Rina and Chahat were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their Balance Sheet as at 31st March, 2019 was as follows:
Asha, Rina and Chahat were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their Balance Sheet as at 31st March, 2019 was as follows:
Asha, Rina and Chahat decided to share future profits equally with effect from 1st April, 2019. For this, it was agreed that:
(i) Goodwill of the firm be valued at ₹ 1,50,000.
(ii) Bad debts amounted to ₹ 40,000. A provision for doubtful debts was to be made @ 5% on debtors.
Pass the necessary journal entries to record the above transactions in the books of the firm.
[Ans. Loss on Revaluation ₹ 31,000; Adjustment for Goodwill : Dr. Chahat by ₹ 20,000 and Cr. Asha and Rina by ₹ 10,000 each.]
Balance Sheet of Asha, Rina and Chahat as at 31st March, 2019
| Liabilities | ₹ | Assets | ₹ |
| Creditors | 12,00,000 | Plant and Machinery | 14,80,000 |
| General Reserve | 2,00,000 | Stock | 2,20,000 |
| Capitals: Asha Rina Chahat | 3,00,000 2,00,000 1,00,000 | Sundry Debtors 2,60,000 Less: Provision for Doubtful debts ₹ 20,000 | 2,40,000 |
| Bank | 60,000 | ||
| Total | 20,00,000 | Total | 20,00,000 |
Anurag Pathak Answered question August 2, 2024
