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Following was the Balance Sheet of A and B who were sharing profits in the ratio of 2 : 1 as at 31st March, 2023:

Liabilities Assets
Capital A/cs:

A

B

Sundry Creditors

 

15,000

10,000

32,950

Building

Plant and Machinery

Stock

Sundry Debtors

Cash in Hand

25,000

17,500

10,000

4,850

600

57950 57950

They admit C into partnership on 1st April, 2023 on the following terms:

a) C was to bring ₹ 7,500 as his capital and ₹ 3,000 as goodwill for 1/4th share in the firm.

b) Values to the stock and Plant and Machinery were to be reduced by 5%.

c) A Provision for Doubtful Debts was to be created in respect of Sundry Debtors ₹ 375.

d) Building was to be appreciated by 10%

Pass necessary Journal entries to give effect to the arrangements. Prepare Profit & Loss Adjustment Account (or Revaluation Account) Partner’s Capital Accounts and Balance Sheet of the new firm.

Anurag Pathak Changed status to publish May 23, 2023
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