The balance sheet of Medha and Radha who share profit and loss in the ratio 3: 1 is as follows: Balance Sheet as on 31 March 2018 Liabilities Amount (₹) Assets Amount (₹) Sundry Creditors 80,000 Cash 78,000 Bills Payable 20,000 Sundry debtors 64,000 Bank overdraft 20,000 Stock 40,000 Capital A/c: Plant and Machinery 60,000 Medha 1,20,000 Furniture 22,000 Radha 40,000 Land and Building 32,000 General reserve 16,000 2,96,000 2,96,000 They decided to admit Krutika on 1st April 2018 on the following terms: Krutika is taken as partner on 1st April 2017. She will pay 40,000 as her capital for 1/5th share in future profits and Rs. 2,500 as goodwill. A 5% provision for bad and doubtful debt be created on debtors. Furniture be depreciated by 20%. Stocks be appreciated by 5% and plant and machinery by 20%. The Capital accounts of all partners be adjusted in their new profit sharing ratio by adjusting the amount through current account. The new profit sharing ratio will be 3/5:1/5:1/5 respectively. You are required to prepare profit and loss adjustment A/c, Partner’s Capital A/c, Balance Sheet of the new firm.

Dr. Profit and Loss Adjustment Account Cr. Particulars Amount (₹) Amount (₹) Particulars Amount (₹) Amount (₹) To R.D.D. A/c 3,200 By Stock A/c 2,000 To Depreciation A/c – Furniture 4,400 By Plant and Machinery A/c 12,000 T Profit on Revaluation Transferred to Partners’ Capital Accounts: Medha 4,800 Radha 1,600 6,400 14,000 14,000 Dr. Partners’ Capital Account Cr. Particulars Medha (₹) Radha (₹) Krutika (₹) Particulars Medha (₹) Radha (₹) Krutika (₹) To Partners’ loan A/c 18,675 6,225 − By Balance b/d 1,20,000 40,000 − To Balance c/d 1,20,000 40,000 40,000 By Bank A/c − − 40,000 By Goodwill A/c 1,875 625 − By General Reserve 12,000 4,000 − By Revaluation A/c 4,800 1,600 − 1,38,675 46,225 40,000 1,38,675 46,225 40,000 Balance Sheet as on 1st April 2018 Liabilities Amount (₹) Amount (₹) Assets Amount (₹) Amount (₹) Capital A/c: Cash 1,20,500 Medha 1,20,000 2,00,000 Sundry Debtors 64,000 60,800 Radha 40,000 Less: R.D.D 3,200 Krutika 40,000 Stock 40,000 42,000 Sundry Creditors 80,000 Add: Appreciation 2,000 Bills Payable 20,000 Plant and Machinery 60,000 72,000 Bank Overdraft 20,000 Add: Appreciation 12,000 Partners’ Current A/c Furniture 22,000 17,600 Medha 18,675 24,900 Less: Depreciation 4,400 Radha 6,225 Land and Building 32,000 3,44,900 3,44,900 Working Notes: (1) Total capital of the firm = (Reciprocal of New Partner’s Profit Sharing ratio) × (Capital contributed by new partner) = (Reciprocal of `1/5`) × 40,000 = 5 × 40,000 = ₹ 2,00,000 Medha’s closing capital balance = `3/5` × 2,00,000 = ₹ 1,20,000 Radha’s closing capital balance = `1/5` × 2,00,000 = ₹ 40,000 (2) General reserve is distributed among old partners in their old profit and loss ratio. (3) Cash Balance: 78,000 + 40,000 + 2,500 = ₹ 1,20,500 [Amount brought in by new partner.]

Practical Problem The balance sheet of Medha and Radha who share profit and loss in the ratio 3:1 is as follows: - Book Keeping and Accountancy

Question

The balance sheet of Medha and Radha who share profit and loss in the ratio 3: 1 is as follows:

Balance Sheet as on 31 March 2018
Liabilities	Amount (₹)	Assets	Amount (₹)
Sundry Creditors	80,000	Cash	78,000
Bills Payable	20,000	Sundry debtors	64,000
Bank overdraft	20,000	Stock	40,000
Capital A/c:		Plant and Machinery	60,000
Medha	1,20,000	Furniture	22,000
Radha	40,000	Land and Building	32,000
General reserve	16,000
	2,96,000		2,96,000

They decided to admit Krutika on 1^st April 2018 on the following terms:

Krutika is taken as partner on 1^st April 2017. She will pay 40,000 as her capital for 1/5th share in future profits and Rs. 2,500 as goodwill.
A 5% provision for bad and doubtful debt be created on debtors.
Furniture be depreciated by 20%.
Stocks be appreciated by 5% and plant and machinery by 20%.
The Capital accounts of all partners be adjusted in their new profit sharing ratio by adjusting the amount through current account.
The new profit sharing ratio will be 3/5:1/5:1/5 respectively.

You are required to prepare profit and loss adjustment A/c, Partner’s Capital A/c, Balance Sheet of the new firm.

Ledger

Solution

Dr.	Profit and Loss Adjustment Account						Cr.
Particulars		Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To R.D.D. A/c			3,200	By Stock A/c		2,000
To Depreciation A/c – Furniture			4,400	By Plant and Machinery A/c		12,000
T Profit on Revaluation Transferred to Partners’ Capital Accounts:
Medha		4,800
Radha		1,600	6,400
			14,000			14,000

Dr.	Partners’ Capital Account								Cr.
Particulars		Medha (₹)	Radha (₹)	Krutika (₹)	Particulars	Medha (₹)	Radha (₹)	Krutika (₹)
To Partners’ loan A/c		18,675	6,225	−	By Balance b/d	1,20,000	40,000	−
To Balance c/d		1,20,000	40,000	40,000	By Bank A/c	−	−	40,000
					By Goodwill A/c	1,875	625	−
					By General Reserve	12,000	4,000	−
					By Revaluation A/c	4,800	1,600	−
		1,38,675	46,225	40,000		1,38,675	46,225	40,000

Balance Sheet as on 1st April 2018
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital A/c:			Cash		1,20,500
Medha	1,20,000	2,00,000	Sundry Debtors	64,000	60,800
Radha	40,000		Less: R.D.D	3,200	60,800
Krutika	40,000		Stock	40,000	42,000
Sundry Creditors		80,000	Add: Appreciation	2,000	42,000
Bills Payable		20,000	Plant and Machinery	60,000	72,000
Bank Overdraft		20,000	Add: Appreciation	12,000	72,000
Partners’ Current A/c			Furniture	22,000	17,600
Medha	18,675	24,900	Less: Depreciation	4,400	17,600
Radha	6,225	24,900	Land and Building		32,000
		3,44,900			3,44,900

Working Notes:

(1) Total capital of the firm = (Reciprocal of New Partner’s Profit Sharing ratio) × (Capital contributed by new partner)

= (Reciprocal of `1/5`) × 40,000

= 5 × 40,000

= ₹ 2,00,000

Medha’s closing capital balance = `3/5` × 2,00,000

= ₹ 1,20,000

Radha’s closing capital balance = `1/5` × 2,00,000

= ₹ 40,000

(2) General reserve is distributed among old partners in their old profit and loss ratio.

(3) Cash Balance: 78,000 + 40,000 + 2,500

= ₹ 1,20,500 [Amount brought in by new partner.]

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Admission of Partner> Revaluation of Assets and Liabilities

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Q 7.Q 6.Q 8.

Chapter 3: Reconstitution of Partnership (Admission of Partner) - Exercise 3.2 (Practical Problems) [Page 164]

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Balbharati Book-Keeping and Accountancy [English] Standard 12 Maharashtra State Board

Chapter 3 Reconstitution of Partnership (Admission of Partner)
Exercise 3.2 (Practical Problems) | Q 7. | Page 164

RELATED QUESTIONS

Ramesh and Umesh were partners in a firm sharing profits in the ratio of their capitals. On 31st March, 2013 their Balance Sheet was as follows:On the above data the firm was dissolved.

Balance Sheet of Ramesh and Umesh as on 31^st March, 2013
Liabilities		Amount Rs	Assets	Amount Rs
Creditors		1,70,000	Bank	1,10,000
Workmen’s Compensation Fund		2,10,000	Debtors	2,40,000
General Reserve		2,00,000	Stock	1,30,000
Ramesh’s Current Account		80,000	Furniture	2,00,000
Capitals:			Machinery	9,30,000
Ramesh	7,00,000		Umesh’s Current Account	50,000
Umesh	3,00,000	10,00,000
		16,60,000		16,60,000

(i) Ramesh took over 50% of stock at Rs 10,000 less than book value. The remaining stock was sold at a loss of Rs 15,000. Debtors were realised at a discount of 5%.
(ii) Furniture was taken over by Umesh for Rs 50,000 and machinery was sold for Rs 4,50,000.
(iii) Creditors were paid in full.
(iv) There was an unrecorded bill for repairs for Rs 1,60,000 which was settled at Rs 1,40,000.

Prepare Realisation Account.

Kalpana and Kanika were partners in a firm sharing profits in the ratio of 3 : 2. On 1^st April, 2013 they admitted Karuna as a new partners for 1/5th share in the profits of the firm. The Balance Sheet of Kalpana and Kanika as on 1st April, 2013, was as follows:

Balance Sheet of Kalpana and Kanika as on 1^st April, 2013
Liabilities		Amount Rs	Assets		Amount Rs
Capitals			Land and Building		2,10,000
Kalpana	4,80,000		Plant		2,70,000
Kanika	2,10,000	6,90,000	Stock		2,10,000
General Reserve		60,000	Debtors	1,32,000
Workmen’s Compensation Fund		1,00,000	Less: Provision	–12,000	1,20,000
Creditors		90,000	Cash		1,30,000

		9,40,000			9,40,000

It was agreed that
(i) the value of Land and Building will be appreciated by 20%.
(ii) the value of plant be increased by Rs 60,000.
(iii) Karuna will bring Rs 80,000 for her share of goodwill premium.
(iv) the liabilities of Workmen's Compensation Fund were determined at Rs 60,000.
(v) Karuna will bring in cash as capital to the extent of `1/5`th share of the total capital of the new firm.

Prepare Revaluation Account, Partner's Capital Accounts and Balance Sheet of the new firm.

The gradual and permanent decrease in the value of fixed assets due to any cause.

Write the word/term or phrase which can substitute the following statement.
Credit balance on revaluation account.

State 'True' or 'False'.

The credit balance of revaluation account means loss on revaluation account.

______ is credited when an unrecorded asset is brought into the business.

If the asset is taken over by the partner ______ account is debited.

Write a word/phrase/term which can substitute the following statement.

An account opened to adjust the value of assets and liabilities at the time of admission of a partner.

Write a word/phrase/term which can substitute the following statement.

An account that is debited when the partner takes over the asset.

Find the Odd one.

A and B are partners in a firm sharing profits and losses in the ratio of 1:1. C is admitted. A surrenders `1/4`th share and B surrenders `1/5`th of his share in favor of C. Calculate the new profit sharing ratio.

Anika and Radhika are partners sharing profits in the ratio of 5:1. They decide to admit Sanika in the firm for `1/5`th share. calculate the sacrifice ratio of Anika and Radhika

Pramod and Vinod are partners sharing profits and losses in the ratio of 3:2. After the admission of Ramesh the new ratio of Pramod, Vinod and Ramesh is 4:3:2. Find out the sacrifice ratio.

What does the excess of debit over credits in the Profit and Loss Adjustment Account indicate?

The stock showed in Balance Sheet → Stock undervalued by 20% → Cost of Stock

₹1,60,000 → __________→ __________

Vikram and Pradnya share profits and losses in the ratio 2:3 respectively. Their balance sheet as on 31st March 2018 was as under.

Balance Sheet as on 31st March 2018

Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	1,05,000	Cash	7,500
Capitals:		Land & Building	37,500
Vikram	75,000	Plant	45,000
Pradnya	75,000	Furniture	3,000
		Stock	75,000
		Debtors	87,000
	2,55,000		2,55,000

They agreed to admit Avani as a partner on 1st April 2018 on the following terms:

Avani shall have 1/4th share in future profits.
He shall bring ₹ 37,500 as his capital and ₹ 30,000 as his share of goodwill.
Land and building to be valued at ₹ 45,000 and furniture to be depreciated by 10%.
Provision for bad and doubtful debts is to be maintained at 5% on the Sundry Debtors.
Stocks to be valued ₹ 82,500.

The capital A/c of all partners to be adjusted in their new profit and loss ratio and excess amount be transferred to their loan accounts.

Prepare Profit and Loss Adjustment Account, Capital Accounts, and New Balance Sheet.

Mr. Kishor & Mr. Lal were in partnership sharing profits & losses in the proportion of 3/4 and 1/4 respectively.

Balance Sheet as on 31 March 2018
Liabilities	Amt (₹)	Amt (₹)	Assets	Amt (₹)	Amt (₹)
Creditors		1,20,000	Land and Building		75,000
General Reserve		12,000	Furniture		6,000
Capital A/c:			Stock		60,000
Kishor	90,000		Debtors		60,000
Lal	48,000	1,38,000	Bills Receivable		39,000
			Cash at Bank		30,000
		2,70,000			2,70,000

They decided to admit Ram on 1 April 2018 on following terms:

He should be given 1/5th share in profit and for that he brought in ₹ 60,000 as capital through RTGS.
Goodwill should be raised at ₹ 60,000.
Appreciate Land and Building by 20%.
Furniture and Stock are to be depreciated by 10%.
The Capitals of all partners should be adjusted in their new profit sharing ratio through Bank A/c.

Pass necessary Journal Entries in the books of the Partnership firm and a Balance sheet of the new firm.

Revaluation A/c is a _________.

On revaluation, the increase in the value of assets leads to _________.

What is meant by the revaluation of assets and liabilities?

How are accumulated profits and losses distributed among the partners at the time of admission of a new partner?

State whether the following will be debited or credited in the revaluation account.

Depreciation on assets
Unrecorded liability
Provision for outstanding expenses
Appreciation of assets

Seenu and Siva are partners sharing profits and losses in the ratio of 5 : 3. In view of Kowsalya admission, they decided

To increase the value of building by ₹ 40,000.
To bring into record investments at ₹ 10,000, which have not so far been brought into account.
To decrease the value of machinery by ₹ 14,000 and furniture by ₹ 12,000.
To write off sundry creditors by ₹ 16,000.

Pass journal entries and prepare a revaluation account.

Sai and Shankar are partners, sharing profits and losses in the ratio of 5 : 3. The firm’s balance sheet as on 31^st December, 2017, was as follows:

Liabilities	₹	₹	Assets	₹	₹
Capital accounts:			Building		34,000
Sai	48,000		Furniture		6,000
Shankar	40,000	88,000	Investment		20,000
Creditors		37,000	Debtors	40,000
Outstanding wages		8,000	Less: Provision for bad debts	3,000	37,000
			Bills receivable		12,000
			Stock		16,000
			Bank		8,000
		1,33,000			1,33,000

On 31^st December, 2017 Shanmugam was admitted into the partnership for 1/4 share of profit with ₹ 12,000 as capital subject to the following adjustments.

Furniture is to be revalued at ₹ 5,000 and building is to be revalued at ₹ 50,000.
Provision for doubtful debts is to be increased to ₹ 5,500
An unrecorded investment of ₹ 6,000 is to be brought into account
An unrecorded liability ₹ 2,500 has to be recorded now.

Pass journal entries and prepare the Revaluation Account and capital account of partners after admission.

Rajan and Selva are partners sharing profits and losses in the ratio of 3 : 1. Their balance sheet as on 31^st March 2017 is as under:

Liabilities	₹	₹	Assets	₹
Capital accounts:			Building	25,000
Rajan	30,000		Furniture	1,000
Selva	16,000	46,000	Stock	20,000
General reserve		4,000	Debtors	16,000
Creditors		37,500	Bills receivable	3,000
			Cash at bank	12,500
			Profit and loss account	10,000
		87,500		87,500

On 1.4.2017, they admit Ganesan as a new partner on the following arrangements:

Ganesan brings ₹ 10,000 as capital for 1/5 share of profit.
Stock and furniture is to be reduced by 10%, a reserve of 5% on debtors for doubtful debts is to be created.
Appreciate buildings by 20%.

Prepare revaluation account, partners’ capital account and the balance sheet of the firm after admission.

The following is the balance sheet of James and Justina as on 1.1.2017. They share the profits and losses equally

Liabilities	₹	₹	Assets	₹
Capital accounts:			Building	70,000
James	40,000		Stock	30,000
Justina	50,000	90,000	Debtors	20,000
Creditors		35,000	Bank	15,000
Reserve fund		15,000	Prepaid insurance	5,000
		1,40,000		1,40,000

On the above date, Balan is admitted as a partner with a 1/5 share in future profits. Following are the terms for his admission:

Balan brings ₹ 25,000 as capital.
His share of goodwill is ₹ 10,000 and he brings cash for it.
The assets are to be valued as under:
Building ₹ 80,000; Debtors ₹ 18,000; Stock ₹ 33,000

Prepare necessary ledger accounts and the balance sheet after admission.

Anbu and Shankar are partners in a business sharing profits and losses in the ratio of 7 : 5. The balance sheet of the partners on 31.03.2018 is as follows:

Liabilities	₹	₹	Assets	₹
Capital accounts:			Computer	40,000
Anbu	4,00,000		Motor car	1,60,000
Shankar	3,00,000	7,00,000	Stock	4,00,000
Profit and loss		1,20,000	Debtors	3,60,000
Creditors		1,20,000	Bank	40,000
Workmen compensation fund		60,000
		10,00,000		10,00,000

Rajesh is admitted for 1/5 share on the following terms:

Goodwill of the firm is valued at ₹ 80,000 and Rajesh brought cash ₹ 6,000 for his share of goodwill.
Rajesh is to bring ₹ 1,50,000 as his capital.
Motor car is valued at ₹ 2,00,000; stock at ₹ 3,80,000 and debtors at ₹ 3,50,000.
Anticipated claim on workmen compensation fund is ₹ 10,000
Unrecorded investment of ₹ 5,000 has to be brought into account.

Prepare revaluation account, capital accounts and balance sheet after Rajesh’s admission.

At the time of admission of a partner, what will be the effect of the following information?

Balance in Workmen compensation reserve ₹40,000. Claim for workmen compensation ₹45,000.

What would be the journal entry of when excess capital was withdrawn by the partner?

A revaluation account is operated to find out the gain or loss at the time of ______

The account which is prepared to adjust the increase or decrease in the value of assets at the time of admission of a partner is called:

Balance in the Investment Fluctuation Reserve, after meeting the loss on revaluation of Investments, at the time of admission of a partner will be transferred to:

Which account will be prepared to record the adjusting amount of assets and liabilities?

Karan and Saran are partners in a partnership. They admitted Mohit as a new partner for `1/4`th share in profits.

Balance Sheet [Extract]
Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	25,000

If 5% of creditors are not likely to claim their dues, what amount of creditors will be shown in the Balance Sheet on Mohit's admission?

If at the time of admission, there is some unrecorded liability, it will be:

Assertion (A): At the time of admission of a partner if there is any General Reserve, Reserve Fund or the balance of Profit & Loss Account appearing in the balance sheet, it should be transferred to old partners' capital/current accounts in their old profit sharing ratio.

Reason (R): The General reserve, Reserve Fund or the Balance of Profit and Loss Account are the result of the past profits when the new partner was not admitted.

Ram and Shyam were in partnership sharing profits and Losses in the proportion of 3 : 1 respectively. Their Balance sheet as on 31st March, 2020 stood as follows:

Balance Sheet as on 31st March, 2020
Liabilities		Amount (₹)	Assets	Amount (₹)
Sundry Creditors		80,000	Cash	80,000
Bills Payable		42,000	Sundry Debtors	64,000
Capital Accounts:			Land and Building	32,000
Ram	1,20,000	1,60,000	Stock	40,000
Shyam	40,000	1,60,000	Plant and Machinery	60,000
General Reserve		16,000	Furniture	22,000
		2,98,000		2,98,000

They admit Bharat into partnership on 1^st April 2020. The term is that

He shall have to bring in cash ₹ 40,000 as his Capital for 1/5^th share in future profit and ₹ 20,000 as his share of Goodwill.
A provision for 5% doubtful debts to be created on sundry debtors.
Stock should be appreciated by 5% and Land and Building be appreciated by 20%.
Furniture to be depreciated by 20%.
Capital Accounts of all partners be adjusted in their new profit-sharing ratio through Cash Account.

Prepare:

Profit and Loss Adjustment Account
Partners' Capital Account
Balance Sheet of the new firm.

Navya and Radhey were partners sharing profits and losses in the ratio of 3 : 1. Shreya was admitted for 1/5th share in the profits. Shreya was unable to bring her share of goodwill premium in cash. The journal entry recorded for goodwill premium is given below:

Date	Particulars	LF	Debit (₹)	Credit (₹)
	Shreya’s Current A/c ...Dr.		24,000
	To Navya’s Capital A/c			8,000
	To Radhey’s Capital A/c			16,000
	(Being entry for goodwill treatment passed)

The new profit-sharing ratio of Navya, Radhey and Shreya will be ______.

Radhika and Vijay were in Partnership Sharing profits & Losses in proportion of 3:2 respectively. Their Balance Sheet as on 31st March, 2020 stood as follows.

Balance Sheet as on 31st March, 2020
Liabilities		Amount (₹)	Assets	Amount (₹)
Capital A/cs:			Premises	2,80,000
Radhika	2,00,000	3,20,000	Furniture and Fixture	22,800
Vijay	1,20,000	3,20,000	Stock	54,000
Current A/cs:			Debtors	18,200
Radhika	2,400	5,200	Cash at bank	2,200
Vijay	2,800	5,200
Loan from Omkar Balu		40,000
Creditors		12,000
		3,77,200		3,77,200

On 1st April, 2019 Omkar was admitted to the firm on the following terms:

Premises were to be valued at ₹ 3,40,000 and Furniture and Fixtures at ₹ 20,800. A provision for Bad debts on 2,000 was to be made. Stock should be revalued at ₹ 58,000.
Omkar Should bring in ₹ 80,000 as Capital and ₹ 20,000 as his share of goodwill and it was retained in the business and he should be given one-fourth share in the future profits.
The Loan from Omkar Balu was repaid through NEFT.

Prepare Revaluation Account, Partners Current Accounts and Balance sheet of the New firm.

The following is the Balance sheet of partners Aditya and Chaitanya on 31^st March, 2019 they share profits and losses in the ratio of 3 : 2:

Balance sheet as on 31st march 2019

Liabilities	Amount ₹	Assets	Amount ₹
Creditors	60,000	Building	30,000
Capital Accounts:		Furniture	1,800
Aditya	42,000	Machinery	42,000
Chaitanya	42,000	Stock	24,600
Current Accounts:		Debtors	54,000
Aditya	7,500	Cash	6,000
Chaitanya	6,900
	1,58,400		1,58,400

Adjustments:

They admitted Sachin into partnership on 1^st April, 2019 on the following terms:

Building to be valued at ₹ 36,000, machinery and furniture to be reduced by 10%.
Sachin should pay ₹ 6,000 as his share of Goodwill. 50% of goodwill withdrawn by partners in cash.
A provision of 5% on debtors to be made for doubtful debts.
He should bring ₹ 18,000 as capital for 1/4th share in future profit.
Stock is to be taken at the value of ₹ 30,000.

Prepare:

Profit and Loss Adjustment Account.
Partners’ Current Account.
Balance Sheet of the New Firm.

X and Y are partners in a firm with capital of ₹ 18,000 and ₹ 20,000. Z brings ₹ 10,000 for his share of goodwill, and he is required to bring proportionate capital for `1/3`rd share in profits. The capital contribution of Z will be ______.

Hansa and Kavya share profits and losses in the ratio of 3: 2 respectively. Their Balance Sheet as on 31st March, 2023 was as under:

Balance Sheet as on 31st March, 2023
Liabilities	Amount (₹)	Assets	Amount (₹)
Bills Payable	90,000	Cash at Bank	1,500
Reserve fund	60,000	Sundry Debtors	1,33,500
Capital A/c:		Stock	51,000
Hansa	2,16,000	Furniture	72,000
Kavya	1,44,000	Plant	1,80,000
		Building	72,000
	5,10,000		5,10,000

They admit Munir into partnership on 1-4-2023. The terms being that:

(1) He shall have to bring in ₹ 1,20,000 as his Capital for 1/4th share in future profits.

(2) Value of Goodwill of the firm is to be fixed at the average profits for the last three years.

The Profits were:

2019-20	₹ 96,000
2020-21	₹ 1,62,000
2021-22	₹ 1,47,000

(3) Reserve for Doubtful debts is to be created at ₹ 3,000.

(4) Closing stock is valued at ₹ 45,000.

(5) Plant and Building is to be depreciated by 5%.

Prepare Profit and Loss Adjustment Alc, Capital Accounts of Partners and Balance Sheet of the new firm.

Seeta and Geeta share profits and losses in the ratio of 3:2 in Partnership Firm. Their Balance Sheet as on 31^st March, 2020 was as under:

Balance Sheet as on 31^st March, 2020

Liabilities		Amount (₹)	Assets		Amount (₹)
Capitals:		40,500	Bank		11,250
Seeta	22,500		Bills Receivable		5,700
Geeta	18,000		Debtors	31,200	30,000
Creditors		18,750	(-) R.D.D.	1,200	30,000
Biil Payable		15,000	Stock		18,000
Bank Loan		24,000	Furniture		7,050
General Reserve		3,750	Machinery		7,500
			Building		22,500
		1,02,000			1,02,000

On 1^st April, 2020 they admitted Reeta on the following terms:

For half (1/2) share in future profit Reeta should bring ₹ 15,000 as capital and ₹ 7,500 for goodwill in cash.
Furniture should be appreciated up to ₹ 8,025 and building be appreciated by 20%.
R.D.D. is to be maintained at ₹ 1,500.
The stock is to be reduced by 10% and machinery depreciated by 5%.
Half of amount of goodwill is withdrawn by old partners.

Pass the necessary Journal Entries in the books of the firm.

Practical Problem The balance sheet of Medha and Radha who share profit and loss in the ratio 3:1 is as follows: - Book Keeping and Accountancy

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Practical Problem The balance sheet of Medha and Radha who share profit and loss in the ratio 3:1 is as follows: - Book Keeping and Accountancy

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