Mrs. Shehal and Mrs. Meenal are equal partners in a business. Their balance sheet is as follows.


Balance Sheet as on 31st March, 2013         [10 MARKS]
Liabilities

Amount Rs.
Assets

Amount Rs.
Capital A/cs

Premises

20,500
Snehal
80000
Investments

10,500
Meenal
45000
125000
Equipments

5,000
Creditors

46,000
Bills Receivable

18,000
General reserve

20,000
Debtors
110000




( - ) R.D.D.
11000
99000



Bank Balance

38,000


191,000


191,000

They agreed to admit Mr. Komal on 1st April, 2013 on the following terms:
(1) Komal should bring Rs. 50,000 towards her capital for one fourth (1/4th )Share in future profit.
(2) Goodwill to be raised in the books of the firm for Rs. 40,000.
(3) R.D.D. to be maintained at 5% on debtors.
(4) Premises to be valued at Rs. 30,000 and equipments to be written off fully.
(5) Creditors allowed a discount of Rs. 1,000 and they were paid off immediately.
Prepare: Profit and Loss Adjustment Account, Partner's Capital Accounts and Balance Sheet of the new firm.

Solution:
Profit and Loss Adjustments Account.
Particulars

Rs.
Particulars

Rs.
To Equipment

5000
By R.D.D.
[11,000 – 5,500]

5,500
To Profit on Revaluation A/c


By Premises

9500
Snehal's Capital A/c
5500

By Creditors

1000
Meenal's Capital A/c
5500
11000





16000


16,000





Partners' Capital Accounts
Particulars
Snehal
Meenal
Komal
Particulars
Snehal
Meenal
Komal




By Balance b/d
80,000
45,000
-




By General Reserve A/c
10,000
10,000
-




By Bank A/c


50,000




By Goodwill A/c
20,000
20,000
-




By Revaluation A/c
(Profit)
5500
5500
-
To Balance c/d
115500
80500
50000





114500
79500
50000

115500
80500
50000


Balance Sheet of the new firm as on 1st April, 2013

Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Capital A/c


Premises
20500

Snehal
115500

(+) Appreciation
9500
30000
Meenal
80500

Investments

10,500
Komal
50000
246000
Equipments
5,000




( - ) Written off
- 5000
Nil
Creditors
46,000

Bills Receivable

18,000
( - ) Discount
- 1000

Debtors
1,10,000


45,000

( - ) R.D.D. @ 5%. p.a.
- 5,500
1,04,500
( - ) Paid off
45,000
Nil
Goodwill [W.N. 1]

40,000



Bank Balance [W.N. 2]

43,000








246000


246000

Working Note No. 1.
Goodwill A/c
Particulars
Rs.
Particulars
Rs.
To Snehal's Capital A/c
20,000


To Meenal's Capital A/c
20,000




By Balance c/d
40,000

40,000

40,000

Bank A/c   

Particulars
Rs.
Particulars
Rs.
To Balance b/d
38,000
By Creditors
45000
To Komal's Capital A/c
50,000




By balance c/d
43,000

88000

88000