Question

The Balance Sheet of Alka and Salma who share profits and losses in proportion to their capitals as at 31st March, 2018 was as follows:

Balance Sheet

(3)

38,000

25,000

12,000

Assets

Land and Building

Plant and Machinery

Furniture

Vehicles

Stock

Debtors

Cash in hand

Liabilities

Creditors

Bills Payable

Reserve Fund

Current A/cs:

Alka

Salma

Capital A/cs:

Alka

Salma

(?)

40,000

27,000

3,500

2,700

28,200

81,120

5.080

9.000

3.600

60,000

40.000

12,600

1,87,600

Terms of Mala's admission were as follows:

Mala will bring in 27,200 for her share of capital and goodwill.

() Goodwill of the firm has been valued at 3 years' purchase of the average super profits of last four years. Average profits of the last four years are 22,000 which the normal return

that can be earned with the capital employed are 10,000. (iii) The amount of goodwill was to be withdrawn by the old partners.

(iv) Value of stock is reduced to 26,790.

(u) Land and Building are to be valued at 44,800; Plant and Machinery at 23,600; Furniture at 3,080 and Vehicles at 1,600.

(11) New profit-sharing ratio of partners will be 5:3:2. Pass Journal entries and prepare necessary accounts and new Balance Sheet. Also calculate

sacrificing ratio.​

Answer 1

Answer:

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