# Practical Problem 07

##### Practical Problems | Q 7 | Page 164
 The balance sheet of Medha and Radha who share profit and loss in the ratio 3:1 is as follows : Balance Sheet as on 31st March,2018 . Liabilities Amount Amount Asset Amount Amount Sundry Creditors 80,000 Cash 78,000 Bills Payable 20,000 Sundry debtors 64,000 Bank overdraft 20,000 Stock 40,000 Capital A/c : Plant & Machinery 60,000 Medha 1,20,000 Furniture 22,000 Radha 40,000 Land and Building 32,000 General reserve 16,000 2,96,000 2,96,000 They decided to admit krutika on 1st April 2018 on the following terms: 1. Krutika is taken as partner on 1st April 2018 she will pay 40,000 as her capital for 1/5 share in future profits and ` 2,500 as goodwill 2. A 5% provision for bad and doubtful debt be created on debtors. 3. Furniture be depreciated by 20%. 4. Stocks be appreciated by 5% and plant & machinery by 20% 5. The Capital accounts of all partners be adjusted in their new profit sharing ratio by adjusting amount Through loan. 6. The new profit sharing ratio will be 3/5 1/5 1/5 respectively. You are required to prepare profit and loss adjustment A/c, Partner’s capital A/c, Balance Sheet of the new firm.
 IN THE BOOKS OF NEW FIRM Dr                                                                                                                 Profit and Loss Adjustment Account                                                                                              Cr Particular Amount Amount Particular Amount Amount To Debtors 3,200 By Stock 2,000 To Furniture 4,400 By Plant & Machinery 12,000 To Profit on Revaluation Medha Capital A/c 4,800 Radha Capital A/c 1,600 6,400 14,000 14,000
 Dr                                                                                                                                  Partner Capital A/c                                                                                                                        Cr Particular Medha Radha Krutika Particular Medha Radha Krutika By Bal b/d 1,20,000 40,000 By General Reserve 12,000 4,000 To Loan A/c 18,675 6,225 By Cash 40,000 To Bal c/d 1,20,000 40,000 40,000 By Goodwill A/c 1,875 625 By Revaluation A/c 4,800 1,600 1,38,675 46,225 40,000 1,38,675 46,225 40,000
 Balance sheet of New Firm as on 1st April 2018 Liabilities Amount Amount Asset Amount Amount Capital A/c Plant & Machinery 60,000 Medha 1,20,000 Add: Appreciation @ 20% 12,000 72,000 Radha 40,000 Furniture 22,000 Krutika 40,000 2,00,000 Less: Depreciation -4,400 17,600 Medha Loan A/c 18,675 Land & Building 32,000 Radha Loan A/c 6,225 Sundry Debtor 64,000 Sundry Creditor 80,000 Less: RDD @ 5% -3,200 60,800 Bills Payable 20,000 Stock 40,000 Bank overdraft 20,000 Add: Appreciation @ 5% 2,000 42,000 cash 1,20,500 3,44,900 3,44,900
 Dr                                                                                                                                           Cash A/c                                                                                                                                        Cr Particular Amount Amount Particular Amount Amount To Bal b/d 78,000 To Krutika Capital A/c 40,000 To Goodwill A/c 2,500 By Bal c/d 1,20,500 1,20,500 1,20,500
 Dr                                                                                                                             Goodwill A/c                                                                                                                      Cr Particular Amount Amount Particular Amount Amount To Medha Capital A/c 1,875 By Cash 2,500 To Radha Capital A/c 625 2,500 2,500 2,500