A and B are in partnership sharing profits and losses in the proportion of 2/3rd and 1/3rd
Channel: Doubtnut
Date: 29/03/2020

A and B are in partnership sharing profits and losses in the proportion of 2/3rd and 1/3rd respectively. Their Balance Sheet as at 31st March, 2019 was: CashRs 1,000, Sundry DebtorsRs 15,000, StockRs 22,000, Plant and MachineryRs 4,000, Sundry CreditorsRs 2,000, Bank OverdraftRs 15,000, B\'s CapitalRs 10,000. On 1st April, 2019, they admitted C into partnership on the following terms: (a) C to purchase on quarter of the goodwill forRs 3,000 and provideRs 10,000 as Capital, C brings in necessary cash for goodwill and capital. (b) Profits and losses are to be shared in the proportion of one-half to A, one-quarter to B and one quarter to C. (c) Plant and Machinery is to be reduced by 10% andRs 500 are to be provided for estimated Bad Debts Stock is to be taken at a valuation ofRs 24,940. (d) By bringing in or withdrawing cash the capitals of A and B are to be made proportionate to that of C on their profit-sharing basis. Prepare necessary Ledger Accounts in the books of the firm relating to the above arrangement and submit the opening Balance Sheet of the new firm.