question_answer

Amit and Dushyant are partners sharing profits in the ratio of 3 : 2. Their balance sheet stood as under, at 31st December, 2017. Balance Sheet as at 31st December, 2017

Liabilities		Amt (Rs.)	Assets		Amt (Rs.)
Creditors		38,500	Cash		2,000
Employees Provident Fund		4,000	Stock		15,000
Workmen Compensation Reserve		2,500	Prepaid Insurance		1,500
Contingency Reserve		2,500	Debtors	9,400
Capital A/cs			(-) Provision for Doubtful Debts	(400)	9,000
Amit	26,000		Machinery		19,000
Dushyant	13,000	39,000	Building		35,000
			Furniture		5,000
		86,500			86,500

Rita is admitted as a new partner introducing a capital of Rs. 16,000. The new profit sharing ratio is decided as 5 : 3 : 2. Rita is unable to bring in any cash for goodwill. So, it is decided to calculate the amount of goodwill on the basis of Rita's share in the profits and the capital contributed by her. Following revaluations are made.

(i) Stock to be depreciated by 5%.

(ii) Provision for doubtful debts to be made at Rs. 500.

(iii) Furniture to be depreciated by 10%.

(iv) Buildings are valued at Rs. 40,000.

Show the necessary ledger accounts and the balance sheet of the new firm. A, B and C were partners sharing profits and losses in the ratio of 5 : 3 : 2. Balance sheet was as follows: Balance Sheet as at 1st April, 2017

Liabilities		Amt (Rs.)	Assets	Amt (Rs.)
Bank Loan		1,07,000	Book Debts	75,000
Sundry Creditors		13,000	Fixed Assets	1,00,000
Bills Payable		20,000	Stock	50,000
Capital A/cs			Cash	35,000
A	50,000
B	45,000
C	25,000	1,20,000
		2,60,000		2,60,000

C retired on the same date and the following adjustments were made :

(i) Fixed assets were overvalued by 20%.

(ii) Make provision for outstanding expenses Rs. 10,000.

(iii) Goodwill was valued at Rs. 50,000.

C was to be paid immediately by cash brought in by A and B so as to make their capital in new profit sharing ratio which was 3:2. Goodwill was not be raised in the books. Prepare revaluation account, partners' capital account and the balance sheet of the firm.

Answer:

New balance sheet amount = Rs. 1,06,150 Or Balance sheet amount = Rs. 2,40,000