Question

5
illustration 34.
The Balance Sheet of A, B and C who sharing profits in the ratio of 4: 3:2 respectively stood as
follows on 31.12.2015.
Liabilities
₹
Assets
₹
Sundry Creditors
3,800 Cash
700
Capital :
Sundry Debtors
23,000
А
20,000
(-) Reserve
400 22,600
B
7,500
Stock
6,000
С
10,000
37,500 Plant and Machinery
8,000
Land and Building
4,000
41,300
41,300
B having given notice to retire from the firm. The following adjustments in the books of the firm were
greed upon :
(a) that the stock be appreciated by 10%
(b) reserve for doubtful debts is not longer required.
(c) land and building be appreciated by 20%
(d) that adjustments to be made in accounts to rectify previous entries, whereby B was credited in
excess by * 1,800 while A and C were debited in excess 1,100 and 700 respectively
(e) that the goodwill of the firm be fixed at * 54,000 and B's share of the same being adjusted to that
of A and C, who are going to share profits in the ratio of 2:1 in future.
. that the entire capital of the firm as newly constituted will be readjusted by bringing in or paying
of cash, so that the future capital of A and C be in the ratio of 2/3rd and 1/3rd,
Pass Journal Entries to record the above and prepare the Balance Sheet of the new firm showing B's
ance as loan.
AT​

Answer 1

Answer:

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