Practical Problem 10

The following is the Balance Sheet of Om and Jay on 31st March 2018, they share profits and losses in the ratio 3:2

Balance Sheet as On 31st March 2018
Liabilities	Amt	Amt	Assets	Amt	Amt
Creditors		30,000	Cash		3,000
Capital A/c			Building		15,000
Om		21,000	Machinery		21,000
Jay		21,000	Furniture		900
Current A/c			Stock		12,300
Om		3,750	Debtors		27,000
Jay		3,450
		79,200			79,200
They take Jagdish into partnership on 1st April 2018 the terms being
1. Jagdish should pay 3,000 as his share of Goodwill. 50% of goodwill withdrawn by partners in cash.
2. He should bring 9,000 as capital for 1/4th share in future profits.
3. Building to be valued at 18,000, Machinery and Furniture to be reduced by 10%
4. A Provision of 5% on debtors to be made for doubtful debts.
5. Stock is to be taken at the value of 15,000.
Prepare profit and loss A/c, Partner’s Current A/c, Balance Sheet of the new firm.

IN THE BOOKS OF NEW FIRM
Dr Profit and Loss Adjustment Account Cr
Particular	Amt	Amt	Particular	Amt	Amt
To Machinery A/c		2,100	By Building A/c		3,000
To Furniture A/c		90	By Stock A/c		2,700
To R.D.D A/c		1,350
To Profit on Revaluation A/c
Om Current A/c	1,296
Jay Current A/c	864	2,160
		5,700			5,700

Balance sheet of New Firm as on 1st April….
Liabilities	Amt	Amt	Asset	Amt	Amt
Capital Account :			Building	15,000
Om Capital A/c	21,000		Add : Appreciation	3,000	18,000
Jay Capital A/c	21,000		Machinery	21,000
Jagdish Capital A/c	9,000	51,000	Less : Dep @ 10%	-2,100	18,900
Current Accounts :			Furniture	900
OM A/c	5,946		Less : Dep @10%	-90	810
Jay A/c	4,914	10,860	Stock	12,300
			Add :Appreciation	2,700	15,000
Creditor		30,000	Debtor	27,000
			Less : R.D.D @ 5%	-1,350	25,650
			Cash		13,500
		91,860			91,860

Working: