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Hemant and Hira are partners, sharing profits in the ratio of 3/5 : 2/5. They admit Hitashi as partner on 1st April, 2023. Their Balance Sheet as at 31st March, 2023 was as follows:

Liabilities Assets
Creditors

General Reserve

Capital A/cs:

Hemant

Hira

Current A/cs:

Hemant

Hira

45,000

36,000

1,80,000

90,000

30,000

6,000

Cash at Bank

Debtors
Less: PDD

Patents

Investments

Fixed Assets

Goodwill

 

60,000
2,400

 

15,000

57,600

44,400

24,000

2,16,000

30,000

3,87,000 3,87,000

Hitashi is admitted on the following terms:

(i) Provision for Doubtful Debts is to be maintained at 5% on Debtors.

(ii) Outstanding rent of ₹ 15,000 to be provided.

(iii) Accrued income of ₹ 4,500 was not recorded in the books of the firm, now to be recorded.

(iv) Hemant takes investments at ₹ 18,000.

(v) New Profit sharing ratio of partners will be 4 : 3 : 2.

(vi) Hitashi will bring in ₹ 60,000 as capital by cheque.

(vii) Hitashi is to pay an amount equal to her share in firm’s goodwill valued at twice the average profit of the last three financial years which were ₹ 90,000; ₹ 78,000 and ₹ 75,000 respectively.

(viii) Half of the amount of goodwill is to be withdrawn by Hemant and Hira.

Pass the necessary Journal entries, Partner’s Capital and Current Accounts, and the Balance Sheet of the new firm.

Anurag Pathak Changed status to publish July 16, 2023
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