W and R are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as on 31st March, 2016 was as follows :
Balance Sheet of W and R as on 31-3-2016
Provision for Bad Debts
Plant & Machinery
On the above date C was admitted for 1/6th share in the profits on the following terms:
(i) C will bring Rs. 30,000 as his capital and Rs. 10,000 for his share of goodwill premium, half of which will be withdrawn by W and R.
(ii) Debtors Rs. 1,500 will be written off as bad debts and a provision of 5% will be created for bad and doubtful debts.
(iii) Outstanding salary will be paid off.
(iv) Stock will be depreciated by 10%, furniture by Rs. 500 and Plant and Machinery by 8%.
(v) Investments Rs. 2,500 not mentioned in the balance sheet were to be taken into account.
(vi) A creditor of Rs. 2,100 not recorded in the books was to be taken into account.
Pass necessary Journal Entries for the above transactions in the books of the firm on C’s admission.