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Given below is the Balance Sheet of A and B on 31st March, 2023, who are carrying on partnership business. A and B share profits and losses in the ratio of 2 : 1.

Liabilities Assets
Bills Payable

Creditors

Outstanding Expenses

Capital A/cs:

A

B

10,000

58,000

2,000

1,80,000

1,50,000

Cash in Hand

Cash at Bank

Sundry Debtors

Stock

Plant

Building

10,000

40,000

60,000

40,000

1,00,000

1,50,000

4,00,000 4,00,000

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

a) C will being ₹ 1,00,000 as his capital and ₹ 60,000 as his share of goodwill for 1/4th share in the profits.

b) Plant is to be appreciated to ₹ 1,20,000 and the value of building is to be appreciated by 10%.

c) Stock is found overvalued by ₹ 4,000.

d) A provision for doubtful debts is to be created at 5% of sundry debtors.

e) Creditors were unrecorded to the extent of ₹ 1,000.

Pass the necessary Journal entries, prepare the Revaluation Account and Partner’s Capital Accounts and show the Balance Sheet after the admission of C.

Anurag Pathak Changed status to publish May 25, 2023
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