Ram, Shyam and Bharat were partners sharing profits and losses in the ration of 2:3:3 respectively. Their Balance Sheet on 31st March, 2012 was as follows.

12. Ram, Shyam and Bharat were partners sharing profits and losses in the ration of 2:3:3 respectively. Their Balance Sheet on 31st March, 2012 was as follows.

Balance Sheet as on 31st March, 2012

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Bills Payable		10000	Cash in Hand		500
Trade Creditors		30000	Cash at Bank		22000
Loan from 'Usha'		20000	Bills Receivable		4500
General Reserve		16000	Trade Debtors		60000
Capital Account:			Stock in Trade		35000
Ram	20000		Furniture		2000
Shyam	27000		Building		29000
Bharat	30000	77000
		153000			153000

On 1st April, 2012 they admitted Laxman into prtnership for ¼ th share on the following terms.

(i) Laxman should bring Rs. 25,000 as capital.

(ii) A goodwill account be opened in the books for Rs. 40,000 and the old partners be credited in their profit sharing ratio.

(iii) The value of stock in trade be reduced by 10%.

(iv) Building be appreciated by 15%.

(v) A provision for Bad Debts of Rs. 4000 be made.

(vi) An item of Rs. 502 included in Trade Creditors is not likely to be claimed and hence should be written off.

(vii) There being a claim for damages against the firm, a liability to the extent of Rs. 1000 should be created.

(viii) After Laxman's Admission in the firm Goodwill account should be written off.

Prepare (a) Profit and Loss Adjustment Account. (b) Balance Sheet of the new firm.

Ans.
Profit and loss adjustment a/c	Profit. Rs. 3648
Balance sheet total	174850
Bank A/c Bal	47000
Capital A/c
Ram	25588
Shyam	35382
Bharat	38382
Laxman	15000