BALANCE SHEET OF RAM AND SHYAM as at 31st March, 2021
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| Creditors | 70,000 | Cash at Bank | 25,000 |
| General Reserve | 25,000 | Debtors – 1,62,500 | |
| Employees’ Provident Fund | 55,000 | Less: Provision for Doubtful debts – (12,500) | 1,50,000 |
| Capitals: | Stock | 82,500 | |
| Ram – 1,50,000 | Machinery | 142,500 | |
| Shyam – 1,00,000 | 2,50,000 | ||
| 4,00,000 | 4,00,000 |
They decided to admit Mahesh on 1st April, 2021 for 1/5th share which Mahesh acquired wholly from Shyam on the following terms:(i) Mahesh shall bring Rs. 25,000 as his share of premium for Goodwill.
(ii) A debtor whose dues of Rs. 7,500 were written off as bad debt paid Rs. 5,000 in settlement.
(iii) A claim of Rs. 12,500 on account of workmen’s compensation was to be provided for.
(iv) Machinery were undervalued by Rs. 5,000. Stock was valued 10% more than its
market value.
(v) Mahesh was to bring in capital equal to 20% of the combined capitals of Ram and Shyam after all adjustments.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm.
SOLUTION
