Practical Problem 08

The Balance Sheet of Sahil and Nikhil who share profits in the ratio of 3:2 as on 31st March, 2017
Balance Sheet as on 31st March,2018 .
Liabilities	Rs	Rs	Asset	Rs	Rs
Creditors		60,000	Furniture		60,000
Capitals:			Building		72,000
Sahil	80,000		Debtors		40,000
Nikhil	1,00,000	1,80,000	Closing Stock		48,000
			Cash in Hand		20,000
		2,40,000			2,40,000
Varad admitted on 1St April 2017 on the following terms :
1. Varad was to pay 1,00,000 for his share of capital.
2. He was also to pay 40,000 as his share of goodwill.
3. The new profit sharing ratio was 3:2:3
4. Old partners decided to revalue the assets as follows:
Building 1,00,000, Furniture- 48,000, Debtors – 38,000 (in view of likely bad debts)
5. It was found that there was a liability for 3,000 for goods in March 2017 but recorded on 2nd April 2017 .
You are required to prepare : a) Profit and Loss adjustment accounts, b) Capital accounts of the partners c) Balance sheet after the admission of Varad.

IN THE BOOKS OF NEW FIRM
Dr Profit and Loss Adjustment Account Cr
Particular	Amount	Amount	Particular	Amount	Amount
To Furniture A/c		12,000	By Building A/c		28,000
To Debtors		2,000
To Unrecorded Liability		3,000

To Profit on Revaluation A/c
Sahil Capital A/c	6600
Nikhil Capital A/c	4400	11,000
		28,000			28,000

Balance sheet of New Firm as on 1st April 2017
Liabilities	Amount	Amount	Asset	Amount	Amount
Creditors		60,000	Furniture	60,000
Unrecorded Liability		3,000	Less: Depreciation	12,000	48,000
Capital A/c			Building	72,000
Sahil A/c	1,10,600		Add: Appreciation	28,000	1,00,000
Nikhil A/c	1,20,400		Debtors	40,000
Varad A/c	1,00,000	3,31,000	Less: RDD	2,000	38,000
			Closing Stock		48,000
			Cash A/c		1,60,000
		3,94,000			3,94,000