A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1. From 1s
Channel: Doubtnut
Date: 26/04/2020

A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1. From 1s April, 2019 they decided to share future profits and losses equally .  Following balances appeared in their books :  `{:(," Rs."),("Profit and Loss A/c (Cr.)","20,000"),("Advertisement Suspense A/c (Dr.)","15,000"),("Workmen Compensation Reserve","60,000"):}`  It was agreed that : (i) Goodwill should be valued at two year's purchase of super profits. Firm's average profits. Firm's average profits are Rs. 75,000. Capital invested in the business is Rs. 6,00,000 and normal rate of return is 10%.  (ii) Furniture (book value of Rs. 50,000) be reduced to Rs. 30,000.  (iii) Computers  (book value of Rs. 40,000) be reduced by Rs. 10,000.  (iv) Claim on account of Workmen's Compensation amounted to Rs. 50,000.  (v) Investments (book value of Rs. 30,000) were revalued at Rs. 25,000.  Pass necessary journal entries for the above.