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 31.3.2019
Liabilities	Amount (₹)	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 Compensation Reserve		55,000	Furniture	70,000
Capital		4,50,000	Machinery	2,00,000
Raman	3,00,000		Land & Building	1,96,000
Aman	1,50,000
		6,79,000		6,79,000

On the above date, Suman was admitted as a new partner for 1/5^th share in the profits on the following conditions:

1. Suman will bring ₹ 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 ₹ 1,00,000.
2. Outstanding expenses will be paid off. ₹ 5,000 will be written off as bad debts and a provision of 5% for bad debts on debtors was to maintained.
3. The liability towards workmen compensation was estimated at ₹ 60,000.
4. Machinery was to be depreciated by ₹ 18,000 and Land and Building was to be depreciated by ₹ 54,000.

Pass necessary journal entries for the above transactions in the books of the firm.

Answer 1

Books of Raman, Aman and Suman Journal Entries
Date	Particulars	L.F.	A (₹)	B (₹)
2019
Mar. 3	Outstanding Expenses A/c    ...Dr.		18,000	-
	To Bank A/c		-	18,000
	(Being outstanding paid off)
	Bad Debts A/c     ...Dr.		5,000	-
	To Debtors A/c		-	5,000
	(Being Bad Debts written off)
	Provision for Doubtful Debts A/c    ...Dr.		5,000	-
	To Bad Debts A/c		-	5,000
	(Being bad debts adjusted through provision for doubtful Debts A/c)
	Revaluation A/c    ...Dr.		74,500	-
	To Provision for Doubtful Debts A/c		-	2,500
	To Machinery A/c		-	18,000
	To Building A/c		-	54,000
	(Being decrease in value of assets recorded)
	Revaluation A/c    ...Dr.		5,000	-
	Workmen Compensation Reserve A/c    ...Dr.		55,000	-
	To Provision for workmen compensation claim A/c		-	60,000
	(Being claim on account of workmen compensation provided in the books)
	Raman’s Capital A/c    ...Dr.		59,625	-
	Aman’s Capital A/c    ...Dr.		19,875	-
	To Revaluation A/c		-	79,500
	(Being Revaluation loss distributed between old partners)
	Bank A/c    ...Dr.		2,20,000	-
	To Suman’s Capital A/c		-	2,00,000
	To Premium for Goodwill A/c		-	20,000
	(Being capital and goodwill brought by Suman)
	Premium for Goodwill A/c    ...Dr.		20,000	-
	To Raman’s Capital A/c		-	15,000
	To Aman’s Capital A/c		-	5,000
	(Being premium for goodwill distributed between old partners in sacrificing Ratio)