Stock Rs. 15,000, Debtors Rs. 13,500, Cash in hand Rs. 5,000, Bank balance Rs. 10,000, Bills Receivable Rs. 6,000, Plant & Machinery Rs. 60,000, Creditors Rs. 17,500, Bills Payable Rs. 6,000, Accrued interest Rs. 350, Prepaid expenses Rs. 150, Debentures Rs. 25,000, Provision for taxation Rs. 1,500.
Answers
Explanation:
Following was the Balance Sheet of A and B who were sharing profits in the ratio of 2:1 as at 31
st
March,2018:
Liabilities (Rs.) Assets (Rs.)
Capital A/c:
A 15,000
B 10,000
Sundry Creditors
25,000
32,950 Building
Plant and Machinery
Stock
Sundry Debtors
Cash in Hand 25,000
17,500
10,000
4,850
600
57,950 57,950
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 1/4
th
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 Debtors 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.