Amar and Akbar are the partners in a business sharing profits and losses in the ratio 3:2 respectively. Their Balance Sheet as on 31st March, 2012 stood as under.

4. Amar and Akbar are the partners in a business sharing profits and losses in the ratio 3:2 respectively. Their Balance Sheet as on 31st March, 2012 stood as under.
Balance sheet as on 31st March, 2012

Liabilities
Rs.
Assets
Rs.
Sundry Creditors
12600
Land and Building
25000
Amar Capital A/c
27000
Furniture
3700
Akbar Capital A/c
18000
Stock
14500


Sundry Debtors
13400


Cash at Bank
1000









57600

57600

They admitted Amit on 1.4.2012 as a partner on the following terms.
1. Depreciate Furniture by Rs. 800 and stock by 10%.
2. Reserve of 5% on debtors be created for bad and doubtful debts.
3. Amit should bring in Rs. 7000 as capital and Rs. 4000 as Goodwill.
4. Amit will receive 1/8 th share in future profits.
5. The value of Land and Building be raised upto Rs. 32,000
6. The Capital accounts of all the partners be adjusted in proportion to their profit sharing ratio and excess amount be refunded to partner.
Prepare Profit and Loss Adjustment Account, Capital Accounts of Partners and Balance Sheet of the new firm.

Ans.

Profit and loss adjustment a/c
Profit 4080
Balance sheet total
68600
Bank Balance
7920
Capital A/c

Amar
29400
Akbar
19600
Amit
7000
New ratio
21:14:5

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