Q. 3. Rani and Geeta are partners sharing profits and losses 3:2 respectively. Their position on 31st March, 2013 was as follows:

Q. 3. Rani and Geeta are partners sharing profits and losses 3:2 respectively. Their position on 31st March, 2013 was as follows: [10]

Balance sheet as on 31st March, 2013.

Liabilities
Amount (Rs.)
Assets
Amount (Rs.)
Amount (Rs.)
Capital Accounts

Building

100000
Rani
100000
Furniture

10000
Geeta
75000
Stock

31000
Creditors
10000
Debtors
50000

Bills Payable
5000
Less: R.D.D.
-1000
49000
General Reserve
15000
Bank Balance

15000

205000


205000

On 1st April, 2013 hey admitted suvarna on the following terms:

(1) Suvarna should bring in cash Rs. 1,00,000 as capital for 1/5 th share in future profit and Rs. 25,000 as goodwill.

(2) Building should be revalued at Rs. 1,25,000.

(3) Depreciate furniture @ 12.5 % and stock @ 10% p.a.

(4) R.D.D. should be maintained as it is.

(5) The Capital Accounts of partners should be adjusted in their new profit sharing ratio through bank account.
Prepare: Profit and loss adjustment account, capital account and balance sheet of the new firm.
Solution: In the books of the firm

Profit and Loss Adjustment A/c

Particulars
Amount Rs.
Amount Rs.
Particulars
Amount Rs.
Amount Rs.
To Furniture A/c

1250
By Building A/c

25000
To Stock A/c

3100



To Revaluation Profit :





Rani Capital A/c
12390




Geeta Capital A/c
8260
20650





25000


25000

Partners’ Capital Accounts

Particulars
Rani
Geeta
Suvarna
Particulars
Rani
Geeta
Suvarna




By Balance b/d
100000
75000





By Bank A/c


100000




By General Reserve A/c
9000
6000





By Goodwill A/c
15000
10000





By Profit and Loss Adjustment A/c
12390
8260

To Balance C/d
240000
160000
100000
By Bank A/c
103610
60740


240000
160000
100000

240000
160000
100000

Balance Sheet as on 1st April, 2013


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


Building
100000

Rani
240000

Add: Appreciation
25000
125000
Geeta
160000

Furniture
10000

Suvarna
100000
500000
Less: Depreciation
1250
8750
Creditors

10000
Stock
31000

Bills Payable

5000
Less: Written off
3100
27900



Debtors
50000




Less: R.D.D.
1000
49000



Bank Balance

304350


515000


515000