Maximum loss is distributed to the partners in their Capital Ratio.
Answers
A & B were partners sharing profits and losses in the ratio 3 : 2 and C & D were partners sharing profits and losses equally. Following were their Balance Sheets.The two firms amalgamated on the following terms: Mr. B agreed to pay Mrs. B’s Loan and Mr. D agreed to pay Mrs. D’s Loan, Outstanding salary was paid in full by the respective firms, Creditors of both the firms were taken by the new form at a discount of 5%, Machinery is subject to 5% depreciation of both the firms, Furniture of A & B was not taken over by the new firm. Furniture of C & D was sold in the market for Rs. 8,000, Fixtures were not taken over by the new firm, Stock of A & B was valued at Rs. 22,100 and Stock of C & D was valued at Rs. 21,000. Prepare Revaluation account and Partner’s Capital accounts in the books of both the firms and show the Balance Sheet of new firm after amalgamation.