Practical Problem 02

Amalendu and Sameer share profits and losses in the ratio 3:2 respectively
Their balance sheet as on 31st March 2017 was as under.
Balance Sheet as on 31st March, 2017.
Liabilities	Rs	Asset	Rs
Sundry Creditors	10,000	Cash at bank	12,000
Amlendu capital	60,000	Sundry debtors	24,000
Sameer capital	40,000	Land & Building	50,000
General reserve	20,000	Stock	16,000
		Plant and machinery	20,000
		Furniture & fixture	8,000
	1,30,000		1,30,000
On 1st April 2017 they admit Paresh into partnership. The term being that:
1 He shall pay ` 16,000 as his share of Goodwill 50% amount of Goodwill shall be withdrawn by the old partners.
2 He shall have to bring in ` 20,000 as his Capital for 1/4 share in future profits.
3. For the purpose of Paresh’s admission it was agreed that the assets would be revalued as follows.
A) Land and Building is to be valued at ` 60,000
B) Plant and Machinery to be valued at `16,000
C) Stock valued at ` 20,000 and Furniture and Fixtures at ` 4,000
D) A Provision of 5% on Debtors would be made for Doubtful Debts.
Pass The necessary Journal Entries in the Books of a New Firm.

Working

Dr Profit and Loss Adjustment Account Cr
Particulars	Amt (₹)	Amt (₹)	Particulars	Amt (₹)	Amt (₹)
To Plant and Machinery A/c		4,000	By Land & Building A/c		10,000
To Furniture and Fixture A/c		4,000	By Stock A/c		4,000
To R.D.D. Debts A/c		1,200
To Profit on Revaluation Transferred to Partners’ Capital A/cs :
Amalendu Sameer	2,880 1,920	4,800
		14,000			14,000

Journal Entry In the Books of New Firm
Date	Particular	Amt	Amt
1st April 17
1	General Reserve A/c Dr	20,000
	To Amalendu Capital A/c		12,000
	To Sameer Capital A/c		8,000
	(Being Reserve Distributed among old Partners)
2	Cash A/c Dr	16,000
	To Goodwill A/c		16,000
	(Being Goodwill Brought by Paresh)
3	Goodwill A/c Dr	16,000
	To Amalendu Capital A/c		9,600
	To Sameer Capital A/c		6,400
	(Being Goodwill Distributed to old Partners)
4	Amalendu Capital A/c Dr	4,800
	Sameer Capital A/c Dr	3,200
	To Cash		8,000
	(Being 50% Of Goodwill Withdrawn)
5	Cash A/c Dr	20,000
	TO Paresh Capital A/c		20,000
	(Being Cash Brought by New Partner)
6	Land & Building A/c Dr	10,000
	To Revaluation A/c		10,000
	(Being Building Appreciated)
7	Revaluation A/c Dr	4,000
	To Plant and Machinery A/c		4,000
	(Being Plant and Machinery Depreciated)
8	Stock A/c Dr	4,000
	To Revaluation A/c		4,000
	(Being Stock Appreciated)
9	Revaluation A/c Dr	4,000
	To Furniture and Fixture		4,000
	(Being Furniture Depreciated)
10	Revaluation A/c Dr	1,200
	To Debtor		1,200
	(Being RDD Created @ 5%)
11	Revaluation A/c Dr	4,800
	To Amalendu Capital A/c		2,880
	To Sameer Capital A/c		1,920
	(Being Profit on Revaluation transfer to Partners)
		1,08,000	1,08,000