Madhu and Amar are partners in a firm sharing profits and losses in the proportion of 3/5 and 2/5 respectively. Their Balance Sheet as on 31st March, 2012 was as follows:

Madhu and Amar are partners in a firm sharing profits and losses in the proportion of 3/5 and 2/5 respectively. Their Balance Sheet as on 31st March, 2012 was as follows:
Balance sheet as on 31.03.2012
Liabilities
Rs.
Assets
Rs.
Madhu's Capital
35000
Sundry Debtors
45000
Amar's Capital
35000
Land and Building
25000
Sundry Creditors
62000
Stock
20500


Cash at Bank
5000


Plant and Machinery
35000


furniture and Fixtures
1500

132000

132000
They have admitted Vasant into Partnership.  the terms being that:
1. He shall pay Rs. 5000 as his share of goodwill, the amount of goodwill retained into business.
2. He shall bring Rs. 15000 as his capital for ¼ share in future profits.
3. For the purpose of Vasant's admission, it was agreed that the assets would be revalued as follows:
a. Land and Building to be taken at Rs. 30,000.
b. Plant and Machinery to be valued at Rs. 32000.
c. A provision of 5% on debtors would be made against doubtful debts.
d. The value of stock at Rs. 25000.
Prepare Profit and Loss Adjustment Account. Partners Capital Account and Balance Sheet of the new firm.
Ans. Profit and Loss Adjustment  A/c: Profit  = 4250
Balance Sheet Total = 156250
Bank A/c Bal. = 25000
Capital A/c : Madhu = Rs. 40,550
Amar = 38700
Vasant = 15000

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