Chapter: Reconstitution of Partnership (Admission of Partner)· Book-Keeping & Accountancy
Sachin and Santosh were in partnership, sharing profit and losses in the proportion of 3 : 1 respectively. Their Balance Sheet as on 31st March, 2020 stood as follows :Balance Sheet as on 31st March, 2020LiabilitiesAmount (₹)AssetsAmount (₹)Capital A…
Q.2 Sachin and Santosh were in partnership, sharing profit and losses in the proportion of 3 : 1 respectively. Their Balance Sheet as on 31st March, 2020 stood as follows :
Balance Sheet as on 31st March, 2020
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Capital Accounts : | Debtors | 1,60,000 | |
| Sachin | 3,00,000 | Land and building | 80,000 |
| Santosh | 1,00,000 | Stock | 1,00,000 |
| General reserve | 40,000 | Furniture | 55,000 |
| Creditors | 2,00,000 | Machinery | 1,50,000 |
| Bills payable | 50,000 | Cash | 2,00,000 |
| Bank overdraft | 55,000 | ||
| Total | 7,45,000 | 7,45,000 |
They admitted Kishor into the partnership on 1st April, 2020 the terms being that :
- He shall have to bring in ₹ 1,00,000 as his capital for 1/5th share in future profit and ₹ 50,000 as his share of goodwill.
- Stock should be appreciated by 5% and building be appreciated by 20%.
- Furniture to be depreciated by 20%.
- A provision for 5% doubtful debts to be created on debtors.
- Capital account of all partners be adjusted in their new profit sharing ratio through cash account.
Prepare : (a) Profit and Loss adjustment account (b) Partners’ Capital account (c) Balance sheet of new firm