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Question - Reconstitution of Partnership Examples and Solutions

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Question

Rani and Geeta are partners sharing profits and losses 3:2 respectively. Their position on 31st March, 2013 was as follows

Balance sheet as on 31st March, 2013.

Liabilities
Amount (Rs.)
Assets
Amount (Rs.)
Amount (Rs.)
Capital Accounts

Building

100000
Rani
100000
Furniture

10000
Geeta
75000
Stock

31000
Creditors
10000
Debtors
50000

Bills Payable
5000
Less: R.D.D.
-1000
49000
General Reserve
15000
Bank Balance

15000

205000


205000
On 1st April, 2013 hey admitted suvarna on the following terms:

(1) Suvarna should bring in cash Rs. 1,00,000 as capital for 1/5 th share in future profit and Rs. 25,000 as goodwill.

(2) Building should be revalued at Rs. 1,25,000.

(3) Depreciate furniture @ 12.5 % and stock @ 10% p.a.

(4) R.D.D. should be maintained as it is.

(5) The Capital Accounts of partners should be adjusted in their new profit sharing ratio through bank account.

Prepare: Profit and loss adjustment account, capital account and balance sheet of the new firm.

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