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