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5.48 Double Entry Book Keeping—CBSE XII

30. A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. On 31st March, 2018, their
Balance Sheet stood as follows:
Liabilities ` Assets `
A’s Capital 1,60,000 Buildings 80,000
B’s Capital 1,20,000 2,80,000 Furniture 24,000
General Reserve 96,000 Stock 48,000
Creditors 64,000 Debtors 2,40,000
Cash at Bank 48,000
4,40,000 4,40,000

It was decided to admit C into the firm with effect from 1st April, 2018 subject to the following terms
and conditions:
(a) C will bring in ` 84,000 of which ` 36,000 will be treated as his share of goodwill to be retained
in the business.
(b) C will be entitled to 1/4th share of the profits.
(c) ` 9,000 is to be provided for Doubtful Debts.
(d) Furniture is to be reduced by 5%.
(e) Stock is to be revalued at ` 42,000.
You are required to prepare necessary Ledger Accounts and Balance Sheet of the firm after the admission
of C from the above informations.
[Ans.: Loss on revaluation—` 16,200; Capital A/cs: A—` 2,37,200; B—` 1,58,600;
C—` 48,000; Balance Sheet Total—` 5,07,800; Bank Balance—` 1,32,000.]
31. M and N are partners in a firm sharing profits and losses in the ratio of 5 : 3. On 31st March, 2018, their
Balance Sheet was:
BALANCE SHEET OF M AND N
Liabilities ` Assets `
Sundry Creditors 4,000 Stock 8,000
Bills Payable 2,000 Sundry Debtors 7,200
Capital A/cs: Cash at Bank 500
M 12,000 Cash in Hand 300
N 10,000 22,000 Machinery 12,000
28,000 28,000

On 1st April, 2018, the partners decide to admit R as a partner on the following terms:
(a) New profit-sharing ratio of M, N and R will be 7 : 5 : 4.
(b) R shall bring in ` 8,000 as his capital and ` 4,000 for his share of goodwill.
(c) M and N will draw half of the goodwill in cash.
(d) Machinery is to be valued at ` 15,000; Stock at ` 10,000 and a Provision for Doubtful Debts of
` 1,000 is to be created.
(e) There is a liability of ` 2,000, being the outstanding salary payable to employees of the firm. This
liability is not included in the creditors. Partners decide to show this liability in the books of account
of the new firm.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of M, N and R.
[Ans.: Revaluation Gain (Profit)—` 2,000; Partners’ Capital A/cs: M—` 14,750;
N—` 11,250; R—` 8,000; Balance Sheet Total—` 42,000.]