On 31st March, 2019 the Balance Sheet of Madan and Mohan who share profits and losses in the ratio of 3 : 2 was as follows :
Balance Sheet of Madan and Mohan as at 31st March, 2019
|Liabilities||Amount (Rs.)||Assets||Amount (Rs.)|
|Creditors||28,000||Cash at Bank||10,000|
|General Reserve||10,000||Debtors 65,000|
|Employees Provident Fund||22,000||Less: Provision for Doubtful Debts (5000)||60,000|
|Mohan 40 000||1,00,000|
They decided to admit Gopal on 1st April, 2019 for 1/5th share which Gopal acquired wholly from Mohan on the following terms:
(i) Gopal shall bring Rs. 10,000 as his share of premium for Goodwill.
(ii) A debtor whose dues of Rs. 3,000 were written off as bad debt paid Rs. 2,000 in full settlement.
(iii) A claim of Rs. 5,000 on account of workmen’s compensation was to be provided for.
(iv) Patents were undervalued by Rs. 2,000. Stock in the books was valued 10% more than its market value.
(v) Gopal was to bring in capital equal to 20% of the combined capitals of Madan and Mohan after all adjustments.
Prepare Revaluation Account, Capital Accounts of the Partners and the Balance Sheet of the new firm.