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Admission of a Partner 3.29

5. Jain and Gupta were partners in a firm sharing profits and losses in the ratio of 4 : 3. Following is the Balance
Sheet of the firm as at 31st March, 2018:
BALANCE SHEET OF JAIN AND GUPTA as at 31st March, 2018
Liabilities ` Assets `

Sundry Creditors 20,000 Cash 14,800
Bills Payable 3,000 Debtors 20,500
Bank Overdraft 17,000 Less: Provision for Doubtful Debts 300 20,200
Capital A/cs: Stock 20,000
Jain 70,000 Plant 40,000
Gupta 60,000 1,30,000 Building 75,000
1,70,000 1,70,000
They agreed to admit Mishra as partner with effect from 1st April, 2018 with 1/4th share in profits on the
following terms:
(i) Mishra will bring in Capital to the extent of 1/4th of the total capital of the new firm after all
adjustments have been made.
(ii) Building is to be appreciated by ` 14,000 and Plant to be depreciated by ` 7,000.
(iii) The Provision for Doubtful Debts on Debtors is to be raised to ` 1,000.
(iv) Mishra will bring ` 21,000 as his share of Goodwill.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the firm immediately after
Mishra’s admission.
6. A and B are partners in a firm sharing profits in the ratio of 5 : 3. Their Balance Sheet as at 31st March, 2018
is given below:
Liabilities ` Assets `
Capital A/cs: Goodwill 10,000
A 55,000 Land and Building 25,000
B 30,000 85,000 Pant and Machinery 35,000
Creditors 19,000 Stock 20,000
Bills Payable 8,000 Debtors 25,000
General Reserve 16,000 Investments 14,000
Provision for Doubtful Debts 1,500 Cash 2,400
Outstanding Salary 2,400 Prepaid Insurance 500
1,31,900 1,31,900
They agreed to admit C on 1st April, 2018 for 1/5th share of profit in future on the following terms:
(i) C brings in ` 5,200 as his share of Goodwill in cash and will bring in such an amount that his Capital
will be 1/5th of the total capital of the new firm.
(ii) Land and Building and Plant and Machinery were to be valued at ` 38,000 and ` 30,000 respectively.
(iii) The Provision for Doubtful Debts was to be maintained up to ` 1,000.
(iv) A Liability for ` 1,200 included in Sundry Creditors was not likely to arise.
(v) Investments of ` 10,000 were taken over by old partners in their profit-sharing ratio.
(vi) B is to withdraw ` 2,400 in cash.
(vii) An amount of ` 100 is outstanding for repairs.
Prepare Revaluation Account, Partners’ Capital Accounts, and Balance Sheet of the new firm.