Raja and Rani were partners sharing profits and losses in proportion of their capitals. Their Balance Sheet on 31st March, 2012 was as under: Balance Sheet as on 31st March, 2012.

14. Raja and Rani were partners sharing profits and losses in proportion of their capitals. Their Balance Sheet on 31st March, 2012 was as under:
Balance Sheet as on 31st March, 2012.


Particulars
Rs.
particulars
Rs.
Capitals:

Building
8000
Raja
14000
Furniture
2000
Rani
7000
Debtors
16000
General Reserve
6000
Stock
11000
Bills Payable
3000
Cash in Hand
3000
Creditors
10000



40000

40000


On 1st April, 2012 they decided to admit Kanchan to partnership on the following terms:


(i) Kanchan to bring Rs. 12000 as capital for ¼ th share in future profits.

(ii) The goodwill of the firm to be valued at two years purchase of the average profit for the last 4 years and Kanchan to bring in her share of goodwill in cash.

(iii) The trading results for the last 4 years were: 2008-09 Rs. 18000 Profit, 2009 – 10 Rs. 18000 Profit, 2010 – 11 Rs. 9000 Loss and 2011 – 12 Rs. 21000 Profit.

(iv) The stock to be revalued at 90% of its book value.

(v) Building and Furniture to be depreciated by 10%.

(vi) The capitals of all partners in the new firm be adjusted in their new profit sharing ratio by making adjustments in cash and taking Kanchan's Capital as base.


You are required to prepare a profit and loss adjustment A/c the capital A/c of the partners and the Balance Sheet of the new firm.


Ans.

Profit and loss adjustment a/c
Loss 2100
Balance sheet total
61000
Cash A/c Bal
26100
Capital A/c

Raja
24000
Rani
12000
Kanchan
12000

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