On 31" March 2020, the Balance Sheet of A and B who were sharing profits in the ratio of 3:2 was as follows
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Answer:They agree to admit C into the partnership on the following terms: (a) C was to bring in Rs. 7,500 as his capital and Rs. 3,000 as goodwill for 1/4th share in the firm. (b) Values of 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 Debtor Rs. 375. (d) Building Account was to be appreciated by 10%. Pass necessary journal entries to give effect to the arrangements. Prepare Profit and Loss Adjustment Account (or Revaluation Account), Capital Accounts and Balance Sheet of the new firm.
Above is the sheet given.
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