Atul and Amit are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2023.
Atul and Amit are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2023.
| Liabilities | ₹ | Assets | ₹ |
| Capital A/cs:
Atul Amit Current A/cs: Atul Amit Creditors Bills Payable |
1,00,000 1,00,000
70,000 50,000 40,000 10,000 |
Plant and Machinery
Furniture Computer Stock Debtors Bills Receivable Cash Bank |
1,80,000 30,000 10,000 40,000 50,000 10,000 10,000 40,000 |
| 3,70,000 | 3,70,000Â |
Abhay is admitted as a partner for 1/4th share on 1st April, 2023 on the following terms:
a) Abhay is to bring ₹ 65,000 as capital after adjusting amount due to him included in creditors and his share of goodwill.
b) ₹ 10,000 included in creditors is payable to Abhay which is to be transferred to his capital account.
c) Furniture is to be reduced by ₹ 3,000 and Plant and Machinery is to be increased to ₹ 1,98,000.
d) Stock is overvalued by ₹ 4,000.
e) A Provision for Doubtful Debts is to be created @ 5%.
f) Goodwill is to be valued at 2 Year’s purchase of average profit for four years. Profits of four years ended 31st March, were as follows: 2023 – ₹ 25,000, 2022 – ₹ 10,000, 2021 – ₹ 25,000, and 2020 – ₹ 2,500.
Pass the Journal entries for the above arrangement.
Anurag Pathak Changed status to publish May 27, 2023
