Ashish and Nimish were partners in a firm sharing profits and losses in the ratio of 3:2. On 31st March, 2019 their Balance Sheet was as follows:
Balance Sheet of Ashish and Nimish as at 31st March, 2019
|Capitals :||Plant and Machinery||2,90,000|
Less:- provision for doubtful debts (1,000)
|Workmen’s Compensation Fund|
On 1st April, 2019, Geeta was admitted into the partnership for 1/4th share in the profits on the following terms :
- Goodwill of the firm was valued at 2,00,000.
- Geeta brought 3,00,000 as her capital and her share of goodwill premium in cash.
- Bad debts amounted to 2,000. Create a provision for doubtful debts @ 5% on debtors.
- Furniture was found undervalued by 65,400.
- Stock was taken over by Nimish for 1,30,000.
- The liability against workmen’s compensation fund was determined at 30,000.
- After the above adjustments, the capitals of Ashish and Nimish were to be adjusted taking Geeta’s capital as the base. Excess or shortage was to be adjusted by opening current accounts.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the firm after Geeta’s admission.