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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:

Liabilities Assets
Capital A/cs:

Arsh

Daksh

General Reserve

Workmen Compensation Reserve

Employee’s Provident Fund

Creditors

50,000

40,000

30,000

5,000

5,000

20,000

Building

Machinery

Stock

Debtors

Cash at Bank

Goodwill

Advertisement Expenditure

50,000

30,000

18,000

22,000

5,000

20,000

5,000

1,50,000 1,50,000

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.

Anurag Pathak Changed status to publish July 16, 2023