A and B are in partnership sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet
Channel: Doubtnut
Date: 2020-03-29

A and B are in partnership sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as on 31st March, 2019 is as under: On 1st April, 2019, they admit C as partner on the following terms: (i) A sacrifices 1/3rd of his share while B sacrifices 1/10th from his share in favour of C. (ii) C\'s Joan will be converted into his capital. (iii) C brings in 60% of his share of goodwill in cash. (iv) Goodwill is to be valued at 2 years\' purchase of super profit of last three completed years. Profits for the last three years ended 31st March, are as follows: 2017-RS.2,40,000, 2018-RS.4,65,000, and 2019-RS.6,90,000. The normal profit is RS-3,15,000 with same amount of capital invested in similar industry. (v) Land and Building was found undervalued by RS.25,000, Stock was found overvalued by RS.35,000 and Provision for Doubtful Debts is to be made equal to 5% of the debtors. (vi) Claim on account of Workmen Compensation is RS.5,000. An unrecoded accrued income of RS.5,000 is to be accounted. A debtor whose dues of RS.25,000 were written of as bad debts, paid RS.20,000 in full settlement. (vii) Capital Accounts of the partners to be readjusted on the basis of their profit-sharing ratio and any excess or deficiency be adjusted by payment or receipt of amount. Prepare Revaluation Account, Partners\' Capital Accounts and the Balance Sheet.