T and N were partners in a firm. On 31st March, 2018 they decided to admit M as a new partner. On 31st March, 2018 the Balance Sheet of T and N stood as follows:
Balance Sheet of T and N as at 31.3.2018
|Liabilities||Amount (Rs.)||Assets||Amount (Rs.)|
|Creditors||18,000||Cash at Bank||1,000|
|N 15,000||45,000||Freehold Property||15,000|
They agreed to admit M as a new partner subject to the following terms and conditions:
(i) M will bring in Rs. 20,000 of which Rs. 4,500 will be treated as his share of goodwill premium to be retained in the business.
(ii) M will be entitled to ¼ th share of the profits in the firm.
(iii) A provision for doubtful debts was to be created at 5% on the debtors.
(iv) Furniture was to be depreciated by 5%.
(v) Stock was to be revalued at Rs. 5,000.
Prepare Revaluation Account, Partners’ Capital Accounts and Opening Balance Sheet of the new firm.