Manoj and Rahul are equal partners in a business. Their Balance Sheet as on 31st March, 2013 stood as under.


Balance Sheet as on 31st March, 2013

Liabilities
Amount
Amount
Assets
Amount
Amount
Sundry Creditors

180000
Cash at Bank

120000
General Reserve

36000
Debtors
62000

Capitals:


(-) R.D.D.
-2000
60000
Manoj

90000
Bills Receivable

24000
Rahul

60000
Buildings

114000



Machinery

48000


366000


366000

They decided to admit Amit on 1st April, 2013 on the following terms:

1. The Machinery & Building be depreciated by 10%.

2. Reserve for doubtful debts be increased to Rs. 5000.

3. Bills Receivable are taken over by Manoj at a discount of 5%.

4. The amount of creditors paid at a discount of 10%.

5. The Capital Accounts of all partners be adjusted in proportion to new profit sharing ratio by opening current account of partners.

6. Amit should bring Rs. 80,000 as capital for his 1/4th in future profits and goodwill account be opened in the books of the firm at RS. 40,000.

Prepare Profit and Loss Adjustment A/c, Partners' capital Account and Balance sheet of the firm.

Solution:

In the books of Partnership Firm

Profit & Loss Adjustment Account

Particulars
Rs.
Rs.
Particulars
Rs.
Rs.
To Machinery A/c

4800
By Creditors A/c

18000
To Building A/c

11400
By Partners' Capital A/c


To R.D.D. A/c

3000
Manoj
1200

To Bills Receivable

1200
Rahul
1200
2400














20400


20400



Partner's Capital Accounts


Particulars
Manoj
Rahul
Amit
Particulars
Manoj
Rahul
Amit
To Bills Receivable
22800


By Balance b/d
90000
60000
-
To Profit & Loss Adjustment A/c
1200
1200

By General Reserve
18000
18000
-
To Balance C/d
120000
120000
80000
By Bank A/c
-
-
80000




By Goodwill A/c
20000
20000
-




By Partner's Current A/c
16000
23200
-









144000
121200
80000

144000
121200
80000


Balance Sheet as on 1st April, 2013



Liabilities
Amount
Amount
Assets
Amount
Amount
Partners' Capital A/c


Goodwill

40000
Manoj
120000

Building
114000

Rahul
120000

(-) Depreciation @ 10%
-11400
102600
Amit
80000
320000
Machinery
48000

Sundry Creditors
180000

(-) Depreciation @ 10%
-4800
43200
(-) Discount @ 10%
-18000

Debtors
62000


162000

(-) R.D.D.
-5000
57000
(-) Amount paid to creditors
162000
NIL
Bills Receivable
24000




(-) Discount @ 5%
-1200





22800




(-) Bills Receivable Taken over by Manoj
-22800
NIL



Cash at Bank

38000



Current Accounts:





Manoj
16000




Rahul
23200
39200


320000


320000