Vaibhav and Vikas were partners sharing profit and losses in the ratio of 2:3 respectively. Their Balance Sheet as on 31st March, 2012 was as follows:


Balance Sheet as on 31st March, 2012

Liabilities
Amount
Assets
Amount
Capital A/c

Land & Building
25000
Vaibhav
50000
Plant
30000
Vilas
50000
Furniture
2000
Creditors
70000
Stock
50000


Debtors
58000


Cash
5000

170000

170000

They agreed to admit Vivek as a partner on 1st April, 2012 on the following terms.

1. Vivek will have ¼ th share in future profits for which he shall bring Rs. 25,000 as his capital and Rs. 20,000 as his share of goodwill.

2. Land and Building are valued at Rs. 30,000 wh8ile stock is valued at Rs. 55,000.

3. Plant is taken over by Vilas at 10% Discount.

4. Depreciate furniture by 10%.

5. Provision for bad and doubtful debts is to be maintained at 5% on debtors.

6. The capital accounts of all the partners to be adjusted in their new profit sharing ratio and excess amount to be transferred to their loan accounts.

Prepare Profit and Loss Adjustment Account, Partner's Capital Accounts and Balance Sheet of New Firm.


Solution.


In the books of Partnership firm.

Profit and Loss Adjustment Account

Particulars
Rs.
Rs.
Particulars
Rs.
Rs.
To Plant

3000
By Land & Building A/c

5000
To Furniture A/c

200
By Stock

5000
To R.D.D. A/c

2900



To Partners' Capital A/c





Vaibhav
1560




Vilas
2340
3900





10000


10000



Partner's Capital Accounts

Particulars
Vaibhav
Vilas
Vivek
Particulars
Vaibhav
Vilas
Vivek
To Plant A/c
-
27000
-
By Balance b/d
50000
50000
-
To Partner's Loan A/c
29560
-
-
By Cash A/c
-
-
25000
To Balance C/d
30000
45000
25000
By Goodwill A/c
8000
12000
-




By Profit & Loss Adjustment A/c
1560
7660





By Partner's Loan A/c
[Deficit Transferred]
-
7660
-









59560
72000
25000

59560
72000
25000



Balance Sheet as on 1st April, 2013


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


Land & Building
25000

Vaibhav
30000

(+) Appreciation
5000
30000
Vilas
45000

Plant
30000

Vivek
25000
100000
(-) Discount @ 10%
-3000

Loan from Vaibhav

29560

27000

Creditors

70000
(-) Plant taken over by Vilas
27000
NIL



Furniture
2000




(-) Depreciation @ 10%
-200
1800



Debtors
58000




(-) Less Provision for bad and Doubtful debts @ 5%
-2900
55100



Stock
50000




(+) Increase in Value
5000
55000



Cash

50000



Loan to Vilas

7660


199560


199560