A and B were partners sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2018, was as follows:
Balance Sheet of A and B as at 31st March, 2018
|Liabilities||Amount (Rs.)||Assets||Amount (Rs.)|
|A 1,04,000||Sundry Debtors 37,600|
|B 52,000||1,56,000||Less: Provision for Doubtful Debts (1,600)||36,000|
|Employees Provident Fund||16,000||Prepaid Insurance||6,000|
|Workmen Compensation Fund||10,000||Plant and Machinery||76,000|
C was admitted as a new partner and brought Rs. 64,000 as capital and Rs. 15,000 for his share of goodwill premium. The new profit sharing ratio was 5 : 3 : 2.
On C’s admission the following was agreed upon:
(i) Stock was to be depreciated by 5%.
(ii) Provision for doubtful debts was to be made at Rs. 2,000.
(iii) Furniture was to be depreciated by 10%.
(iv) Building was valued at Rs. 1,60,000.
(v) Capitals of A and B were to be adjusted on the basis of C’s capital by bringing or paying of cash as the case may be.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of reconstituted firm.