| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| Capital A/c : | Land and Building | 1,50,000 | |
| X – 1,50,000 | Plant and Machinery | 1,00,000 | |
| Y – 1,00,000 | 2,50,000 | Furniture and Fittings | 25,000 |
| Current A/c : | Stock | 75,000 | |
| X – 40,000 | Debtors | 75,000 | |
| Y – 30,000 | 70,000 | Less: Provision for Doubtful Debts – (5,000) | 70,000 |
| Creditors | 1,30,000 | Bills Receivable | 30,000 |
| Bills Payable | 50,000 | Bank | 50,000 |
| 5,00,000 | 5,00,000 |
Z is admitted as a new partner for 1/4th share under the following terms:
(a) Z is to introduce Rs. 1,25,000 as capital.
(b) Goodwill of the firm was valued at nil.
(c) It is found that the creditors included a sum of Rs. 7,500 which was not to be paid. But it was also found that there was a liability for Compensation to Workmen amounting to Rs. 10,000.
(d) Provision for doubtful debts is to be created @ 10% on debtors.
(e) In regard to the Partners’ Capital Accounts, present Fixed Capital Account Method is to be converted into Fluctuating Capital Account Method.
(f) Bills of Rs. 20,000 accepted from creditors were not recorded in the books.
(g) X provides Rs. 50,000 loans to the business carrying interest @ 10% p.a.
You are required to prepare Revaluation Account, Partners’ Capital Accounts, Bank Account and the Balance Sheet of the new firm.
SOLUTION
