Question

The Balance Sheet of Meena and Heena who shared the profits and losses in the ratio of 2 : 1 is as under :

Balance Sheet as on 31st March, 2016

Liabilities	Amount	Assets	Amount
Capital :		Leasehold property	20,000
Meena	1,34,000	Livestock	6,600
Heena	1,20,000	Loose tools	90,200
Creditors	53,800	Stock	86,800
Rent outstanding	10,000	Debtors                        48,000
Reserve fund	7,200	Less : R.D.D.                  2,000	46,000
		Bank	75,400
	3,25,000		3,25,000

On 1st April, 2016 Seema was admitted as `1/4` th partner on the following terms :

1. Seema should bring in Rs 1,20,000 towarsds her capital. 

2.Firm's goodwill is valued at Rs 1,44,000 and Seema agreed to bring her share in the firm's goodwill by a cheque.

3.Reserve for doubtful bebts should be maintained at 7.5% on debtors.

4.Increase live stock by Rs 4,400 and write off loose tools by 20%.

5.Outstanding rent Rs 9,040 is paid in full settlement.

Prepare :

1. Profit and Loss Adjustment Account.

2. Partners' Capital Account . 

3. Balance Sheet of the new firm

Answer 1

In the books of firm
Profit and Loss Adjustment A/C

Particulars	Amount	Particulars	Amount
To Reserve for Doubtful Debts	1,600	By livestock	4400
To Loose Tools	18,040	By outstanding Rent	960
		By Loss trusters to
		Meena's capital A/c	9520
		Heena's capital A/c	4760
			14,280
	19,640		19,640

Partner's Capital A/c

Particulars	Meena	Heena	Seema	Particulars	Meena	Heena	Seeema
To Profit & Loss Adj. A/c	9,520	4,760		By Balance b/d	134,000	120,000
To Balance C/d	153,280	129,640	120,000	By Reserve Fund A/c	4,800	2,400
				By Bank A/c			120,000
				By Goodwill A/c	24,000	12,000
	162,800	134,400	120,000		162,800	134,400	120,000

Balance Seheet

as on Ist April, 2016

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital Accounts:			Leasehold Property		20000
Meena	153280		Live  Stock	6600
Heena	129640		Add: Appreciation	4400	11000
Seema	120000	402920	Loose Tools	90200
Creditors		53800	Less: Depreciation	18040	72160
			Stock		86800
			Debtors	48000
			Less: R.D.D.	(-3600)	44400
			Bank		222360
		456720			456720

Working Notes :
1) Reserve for doubtful bebts :
Debtors                                                    = 48,000
(-) R.D.D. [ 7.5% on 48,000 ]                        3,600   
                                                                   44400

2) Bank : 
     Opening Balance                = 75,400
    (+) Seema share                  = 120,000
    (+) Premium on goodwill    =  36,000
    (-) Outstanding rent paid    =    9,040   
                                                = 222,360

3) Goodwill already calculated i.e; Rs. 1,44,000