X and Y are partners sharing profits and losses in proportion to their capital. Their Balance Sheet

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X and Y are partners sharing profits and losses in proportion to their capital. Their Balance Sheet as at 31.3.2018 is given below:On 1.4.2018 they admit Z on the following terms:

(1) Z is to bring in ₹10,000 as his capital and to pay ₹3,500 for goodwill and he will get 1/4th share of profit.

(2) Provision for bad debts is to be made on debtors at 2%.

(3) Stock to be written-down by 5%.

(4) Freehold premises is to be revalued at ~ 11,400, Plant at ~ 2,800, Furniture ₹1,540 and office equipment ₹495.

(5) Partners agreed that the values of the assets and liabilities are remaining the same and, as such, there should be no change in their book value as a result of the above-mentioned adjustment. You are required to make necessary adjustments in the Capital Accounts of the partners and show the Balance Sheet  of the new firm.

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Related Book For  answer-question

Financial Accounting Volume II

ISBN: 9789387886230

4th Edition

Authors: Mohamed Hanif, Amitabha Mukherjee

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