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M.206 An Aid to Accountancy—CBSE XII

16. X and Y are partners in a firm sharing profits and losses in the ratio of 5 : 3. On
31st March, 2018, they admitted Z (a physically challenged person) as a new partner
for 1/5th share in the profits, when the Balance Sheet of the firm was as follows:
Liabilities ` Assets `

Creditors 2,00,000 Land and Building 15,00,000
Workmen Compensation Reserve 4,00,000 Plant and Machinery 4,00,000
Capital A/cs: Furniture 50,000
X 15,00,000 Stock 2,00,000
Y 9,00,000 Debtors 4,70,000
Less: Provision for Doubtful Debts 12,000 4,58,000
Bills Receivable 70,000
Bank 42,000
Profit and Loss A/c 2,00,000
Advertisement Expenditure 80,000
30,00,000 30,00,000
On Z’s admission, it was agreed that:
(i) Z will bring ` 4,00,000 as his capital and ` 1,60,000 for his share of goodwill
premium, half of which was withdrawn by X and Y.
(ii) Provision for doubtful debts was to be reduced by ` 250.
(iii) Included in the creditors is ` 35,000 which was not to be paid and hence to be
adjusted and ` 10,000 paid to the creditors which is not recorded in the books.
(iv) A provision was to be made for an outstanding bill for electricity ` 30,000.
(v) A claim of ` 3,250 for damages against the firm was likely to be admitted. Provision
for the same was to be made.
After the above adjustments, capitals of the old partners are to be adjusted on the
basis of new partner’s capital. Actual cash was to be brought in or to be paid off as the
case may be.
Prepare Revaluation Account, Capital Accounts of the partners and the Balance Sheet
of the new firm.
Or
Following is the Balance Sheet of X, Y and Z as on 31st March, 2018, who have agreed
to share profits and losses in proportion of their capitals:
Liabilities ` Assets `
Capital A/cs: Land and Building 4,00,000
X 4,00,000 Machinery 6,00,000
Y 6,00,000 Closing Stock 2,00,000
Z 4,00,000 14,00,000 Debtors 2,20,000
Employees’ Provident Fund 70,000 Less: Provision for Doubtful Debts 20,000 2,00,000
Workmen Compensation Reserve 30,000 Cash at Bank 2,00,000
Sundry Creditors 2,00,000 Cash-in-Hand 1,00,000
17,00,000 17,00,000