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Admission of a Partner 3.9

Following are the required adjustments on C’s admission:
(i) C brings in ` 2,00,000 as his Capital and ` 50,000 as his share of Goodwill.
(ii) Stock is undervalued by 10%.
(iii) Creditors include a liability of ` 40,000, which has been decided by the court at
` 32,000.
(iv) In regard to the Debtors, the following debts proved bad or doubtful:
` 20,000 due from X—bad to the full extent.
` 40,000 due from Y—insolvent, estate was expected to pay only 50%.
You are required to prepare Revaluation Account, Partners’ Capital Accounts and Balance
Sheet of the new firm.
Solution:
Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Bad Debts A/c (X) 20,000 By Stock A/c 20,000
To Provision for Doubtful Debts A/c (Y) 20,000 (` 2,00,000 (WN 1) – ` 1,80,000)
(` 40,000 × 50/100) By Creditors A/c 8,000
(` 40,000 – ` 32,000)
By Loss on Revaluation transferred to:
A’s Capital A/c 7,200
B’s Capital A/c 4,800 12,000
40,000 40,000

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars A B C Particulars A B C
` ` ` ` ` `
To Revaluation A/c (Loss) 7,200 4,800 ... By Balance b/d 5,00,000 4,00,000 ...
To Balance c/d 5,82,800 4,55,200 2,00,000 By Reserve A/c 60,000 40,000 ...
By Bank A/c ... ... 2,00,000
By Premium for
Goodwill A/c 30,000 20,000 ...
5,90,000 4,60,000 2,00,000 5,90,000 4,60,000 2,00,000
BALANCE SHEET as at 1st April, 2019
Liabilities ` Assets `

Capital A/cs: Building 5,00,000
A 5,82,800 Plant and Machinery 3,00,000
B 4,55,200 Stock 2,00,000
C 2,00,000 12,38,000 Debtors 2,20,000
Creditors (` 2,00,000 – ` 8,000) 1,92,000 Less: Bad Debts (X) 20,000
Outstanding Expenses 50,000 2,00,000
Less: Provision for
Doubtful Debts (Y) 20,000 1,80,000
Bank (` 50,000 + ` 50,000 + ` 2,00,000) 3,00,000
14,80,000 14,80,000