Arsh and Daksh are partners in a firm with profit sharing ratio as follows: 1/2 to Arsh, 1/3 to Daksh and 1/6 carried to a Reserve. They admit Sachi as a partner on 1st April, 2023. The Balance Sheet of the firm as at 31st March, was as follows:
Workmen Compensation Reserve
Employee’s Provident Fund
Cash at Bank
Following adjustments are required on the admission of Sachi:
(i) Sachi brings ₹ 30,000 for 1/5th share in the firm.
(ii) Goodwill of the firm was valued at ₹ 25,000 and Sachi brings her share of goodwill in cash.
(iii) Stock is undervalued by 10%.
(iv) Creditors include ₹ 800 which is not to be paid, therefore, has to be written back.
(v) For Debtors, the following debts proved bad or doubtful –
(a) ₹ 2,000 due from Amit, bad to the full extent.
(b) ₹ 4,000 due from Bhushan – insolvent, estate expected to pay on 50%.
Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the new firm.