Suresh and Ramesh are partners in a business sharing profits and Losses in the ratio of 2:1 respectively. Their Balance Sheet as on 31st March, 2013 is as follows:



Balance Sheet as on 31st March, 2013

Liabilities
Amount
Amount
Assets
Amount
Amount
Capital A/c


Building

30000
Suresh
50000

Machinery

10000
Ramesh
24000
74000
Furniture

9500
Creditors

57000
Debtors
40000

Bills Payable

20000
(-) R.D.D.
-1000
39000
Reserve Fund

9000
Stock

30000



Bills Receivable

7600



Cash at Bank

33900


160000


160000


They admitted Kailash on 1st April, 2013 as a partner on the following terms:


1. Kailash will bring Rs. 30,000 as his capital for ¼ th share in future profit and Rs. 12000 as goodwill which will be withdrawn by old partners.

2. Stock and Machinery are to be depreciated by 10%.

3. R.D.D. is to be maintained at 5% on debtors.

4. Building is to be appreciated by 20% and furniture is revalued at Rs. 10,000.

Prepare Profit & Loss Adjustment Account, Partners Capital Account and Balance Sheet of the New firm.

Solution:

In the books of new Partnership firm.

Profit and Loss Adjustment Account.

Particulars
Rs.
Rs.
Particulars
Rs.
Rs.
To Machinery A/c

1000
By Building A/c

6000
To Stock A/c

3000
By Furniture A/c

500
To R.D.D. A/c

1000



To Partners' Capital A/c
(Profit of Revaluation)





Suresh
1000




Ramesh
500
1500





6500


6500


Partner's capital Accounts

Particulars
Suresh
Ramesh
Kailash
Particulars
Suresh
Ramesh
Kailash
To Bank A/c
8000
4000

By Balance b/d
50000
24000

To Balance c/d
57000
27500
30000
By Reserve Fund
6000
3000





By Bank A/c


30000




By Goodwill A/c
8000
4000





By Profit & Loss Adjustment A/c
1000
500


65000
31500
30000

65000
31500
30000










Balance Sheet as on 1st April, 2013


Liabilities
Amount
Amount
Assets
Amount
Amount
Partners' Capital Account


Building
30000

Suresh
57,000

(+) Appreciation @ 20%
6000
36000
Ramesh
27,500

Machinery
10000

Kailash
30,000
114500
(-) Depreciation @ 10%
-1000
9000
Creditors

57000
Furniture
9500

Bills Payable

20000
(+) Appreciation
500
10000



Stock
30000




(-) Reduction in value by 10%
-3000
27000



Bills Receivable

7600



Debtors
40000




(-) R.D.D.
-2000
38000



Cash at Bank

63900








191500


191500

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