The balance sheet of Shrihas and Madan as on 31st March, 2012 is set out below, they share profits and losses in the ratio of 2:1.


The balance sheet of Shrihas and Madan as on 31st March, 2012 is set out below, they share profits and losses in the ratio of 2:1. 

Balance sheet as on 31st March, 2012   
  
Liabilities
Amount
Assets
Amount
Shrihas's Capital
40000
Building
20000
Madan's capital
30000
Furniture
6000
General Reserve
24000
Stock
12000
Creditors
16000
Debtors
60000


Cash
6000


Profit & Loss A/c
6000





110000

110000

On 1st April, 2012, they agreed to admit Prasanna as a partner into the firm on the following terms:

1. Prasanna to bring Rs. 12,000 as capital and Rs. 9,000 as a Goodwill which is to ratained in the business. He will be entitled to 1/4th share of profits of the firm.
2. 50% of General Reserve is to remain as Reserve for Doubtful Debts.
3. Furniture is to be depreciated by 5%.
4. Stock is to be revalued Rs. 13,000.
5. Creditors of Rs. 1000 are not likely to claim and hence should be written off.
6. Rent of Rs. 400 due not received has not been recorded in the books. 

Prepare Profit and Loss Adjustment A/c, Partner's Capital A/c and Balance sheet of the firm after admission of Prasanna. 

Ans.
Profit and loss adjustment a/c Profit: 2100
Balance sheet total = Rs. 114100
Cash A/c Balance = 27000
Capital A/c Shrihas = 51400, Madan = 35700, Prasanna = 12,000

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