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Following is the Balance Sheet of Jay and Veeru as at 31st March, 2023 who are partners in a firm sharing profits and losses in the ratio of 3 : 2 respectively.

Liabilities ₹ Assets ₹
Creditors

General Reserve

Capital A/cs:

Jay

Veeru

Current A/cs:

Jay

Veeru

45,000

36,000

 

1,80,000

90,000

 

30,000

6,000

Cash at Bank

Debtors
Less: Provision for Doubtful Debts

Patents

Investments

Fixed Assets

Goodwill

 

60,000
2,400

 

15,000

57,600

44,400

24,000

2,16,000

30,000

3,87,000  3,87,000

Sri is admitted as a new partner on 1st April, 2023 on the following terms:

a) Provision for doubtful debts is to be maintained at 5 % on Debtors.

b) Outstanding rent payable was ₹ 15,000.

c) An accrued income of ₹ 4,500 does not appear in the books of the firm. it is now to be recorded.

d) Jay takes over the investments at an agreed value of ₹ 18,000.

e) New Profit sharing Ratio of partners will be 4 : 3 : 2.

f) Sri will bring in ₹ 60,000 as his capital by cheque.

g) Sri is to pay an amount equal to his share in firm’s goodwill valued at twice the average profit of the last three years ended 31st March, 2023, 2022 and 2021, which were ₹ 90,000; ₹ 78,000 and ₹ 75,000 respectively.

h) Half of the amount of goodwill is to be withdrawn by Jay and Veeru.

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

Anurag Pathak Changed status to publish May 27, 2023
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