On 31st March, 2019 the Balance Sheet of A and B, who were sharing profits in the ratio of 3 : 2 was as follows :

Balance Sheet of A and B as at 31st March, 2019

Liabilities Amount ₹ Assets Amount ₹
Creditors 30,000 Cash at Bank 20,000
Investment Fluctuation Fund 12,000 Debtors 85,000
General Reserve 25,000 Less: Provision
for bad debts 5,000

Capitals : Stock 1,30,000
A 1,60,000 Investments 60,000
B 1,40,000 3,00,000 Furniture 77,000
3,67,000 3,67,000

On 1st April, 2019, they decided to admit C as a new partner for 1/5th share in the profits on the following terms:

(i) C brought 1,00,000 as his capital and 50,000 as his share of premium for goodwill.

(ii) Outstanding salaries of 2,000 be provided for.

(iii) The market value of investments was 50,000.

(iv) A debtor whose dues of 18,000 were written off as bad debts paid 12,000 in full settlement.

Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm. 

Marks-8, CBSE:2019-20/Compartment/Q-22*

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