Raman and Aman were partners in a firm and were sharing profits in 3 : 1 ratio. On 31-3-2019 their balance sheet was as follows:
Balance Sheet of Raman and Aman as on 31-3-2019
|Provision for bad debts||7,000||Bank||24,000|
|Outstanding Expenses||18,000||Bills Receivable||80,000|
|Bills Payable||47,000||Sundry Debtors||95,000|
|Workmen Compensation Reserve||55,000||Furniture||70,000|
Land & Building
On the above date Suman was admitted as a new partner for 1/5th share in the profits on the following conditions:
- Suman will bring 2,00,000 as her capital and necessary amount for her share of goodwill premium. The goodwill of the firm on Suman’s admission was valued at Rs. 1,00,000.
- Outstanding expenses will be paid off. 5,000 will be written off as bad debts and a provision of 5% for bad debts on debtors was to maintained.
- The liability towards workmen compensation was estimated at 60,000.
- Machinery was to be depreciated by 18,000 and Land and Building was to be depreciated by Rs. 54,000.
Pass necessary journal entries for the above transactions in the books of the firm.