Following is the Balance Sheet of the firm, Ashirvad, owned by A , B and C who share profits and losses of the business in the ratio of 3 : 2 :1 .
BALANCE SHEET as at 31st March, 2018
|
Liabilities
|
₹
|
Assets
|
₹
|
Capital A/cs:
|
|
Furniture
|
95,000
|
A
|
1,20,000
|
|
Business Premises
|
2,05,000
|
B |
1,20,000 |
|
Stock-in-Trade |
40,000 |
C
|
1,20,000
|
3,60,000
|
Debtors
|
28,000
|
Sundry Creditors
|
|
20,000
|
Cash at Bank
|
15,000
|
Outstanding Salaries and wages |
|
7,200 |
Cash in Hand |
4,200 |
|
|
|
|
|
|
|
|
|
|
|
|
3,87,200
|
|
3,87,200
|
|
|
|
|
|
On 1st April, 2018, they admit D as a partner on the following conditions :
(a) D will bring in ₹ 1,20,000 as his capital and also ₹ 30,000 as goodwill premium for a quarter of the share in the future profits / losses of the firm.
(b) The values of the fixed assets of the firm will be increased by 10% before the admission of D .
(c) Mohan, an old customer whose account was written off as bad debts , has promised to pay ₹ 3,000 in full settlement of his dues.
(d) The future profits and losses of the firm will be shared equally by all the partners .
Pass the necessary journal entries and Prepare Revaluation Account, Partners' Capital Accounts and opening Balance Sheet of the new firm
Note: There will be no entry for the promise made by Mohan, since it is an event and not a transaction. There is another view , ₹ 3,000 is to be considered as bad debts recovered . In this situation result will be as follows :
Gain( Profit) on Revaluation
₹ 36,000; Capital A/cs: A
₹ 1,66,000; B
₹ 1,42,000; C
₹ 1,16,000; D's Capital
₹ 1,20,000; Balance Sheet Total
₹ 5,72,000.