Question

Raman and Aman were partners in a firm and were sharing profits in 3:1 ratio. On 31.3.2019 their
balance sheet was as follows :
Balance Sheet of Raman and Aman as on 31.03.2019
Liabilities Amount (`) Assets Amount (`)

Provision for bad debts 7,000 Bank 24,000
Outstanding Expenses 18,000 Bills Receivable 80,000
Bills Payable 47,000 Sundry Debtors 95,000
Sundry Creditors 1,02,000 Stock 14,000
Workmen Furniture 70,000
Compensation Reserve 55,000 Machinery 2,00,000
Capital Land & Building 1,96,000
Raman 3,00,000
Aman 1,50,000 4,50,000
6,79,000 6,79,000
On the above date, Suman was admitted as a new partner for 1/5th share in the profits on the
following conditions :
(i) Suman will bring Rs.2,00,000 as her capital and necessary amount for her share of goodwill
premium. The goodwill of the firm on Suman’s admission was valued at Rs.1,00,000.
(ii) Outstanding expenses will be paid off. Rs.5,000 will be written off as bad debts and a
provision of 5% for bad debts on debtors was to be maintained.
(iii) The liability towards workmen compensation was estimated at Rs.60,000.
(iv) Machinery was to be depreciated by Rs.18,000 and Land and Building was to be
depreciated by Rs. 54.000
Pass necessary journal entries for the above transactions in the books of the firm.

Answer 1

Answer:

Balance sheet of Raman and Aman as of 31-3-2019

Liability                             Amount(₹)    Assets             Amount(₹)  

Provisions for bad debts        7,000        Bank                     24,000

Exceptional Expenses          18,000        Receivable Bills     80,000

Bills payable                          47,000      Sundry debtors     95,000

Various Creditors              1,02,000       Stocks                    14,000

Workmen                                                 Furniture                70,000

Reserve  compensation      55,000      Machinery           2,00,000

Capitals:                                                Land & Building   1,96,000  

 Raman 3,00,000

Aman  1,50,000               4,50,000

                                           6,79,000                                  6,79,000

Suman was approved as a new partner on the aforementioned day for a 1/5th share of the revenues under the following terms:

Suman will contribute a total of 2,00,000 as her initial investment and the required amount for her portion of the goodwill premium. On Suman's admission, the firm's goodwill was valued at a million dollars. Expenses that have not been paid in full will be reimbursed. A provision of 5% for bad debts on debtors was to be maintained, with 5,000 wiped off as bad debts.

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