0
0 Comments

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 3,70,000 

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
Add a Comment