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A and B are partners in a firm. Net profit of the firm is divided as follows: 1/2 to A, 1/3 to B and 1/6 carried to a Reserve. They admit C as a partner on 1st April, 2023 on which date, the Balance Sheet of the firm was:

Liabilities Assets
Capital A/cs:

A

B

Reserve

Creditors

Outstanding Expenses

50,000

40,000

10,000

20,000

5,000

Building

Plant and Machinery

Stock

Debtors

Bank

50,000

30,000

18,000

22,000

5,000

1,25,000 1,25,000

Following are the required adjustments on admission of C:

a) C brings in ₹ 25,000 towards his capital

b) C also brings in ₹ 5,000 for 1/5th share of goodwill.

c) Stock is undervalued by 10%.

d) Creditors include a liability of ₹ 4,000, which has been decided by the court at ₹ 3,200.

e) In regard to the Debtors, the following Debts proved Bad or Doubtful

₹ 2,000 due from X – Bad to the full extent;
₹ 4,000 due from Y – insolvent, estate expected to pay only 50%

You are required to prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the new firm.

Anurag Pathak Changed status to publish May 25, 2023
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