Practical Problem 07

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

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