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

LiabilitiesAmount (Rs.)AssetsAmount (Rs.)
Creditors18,000Cash at Bank1,000
General Reserve2,000Debtors40,000
Capital Stock6,000
    T             30,000 Furniture3,000
    N            15,00045,000Freehold Property15,000

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.

Marks-6, CBSE:2018-19/Main/05/Q-13

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