Rajinder and Vijay were partners in a firm sharing profits in the ratio 3:2. On 31st March 2023 their balance sheet was as follows:
With an aim to expand business it is decided to admit Ranvijay as a partner on 1st April 2023 on the following terms:
a) Provision for doubtful debts is to be increased to 6% of debtors. b) An outstanding bill for repairs ₹ 50,000 to be accounted in the books c) An unaccounted interest accrued of ₹ 7500 be provided for . d) Investment were sold at book value. e) Half of stock was taken by Rajinder at ₹42,000 and remaining stock was also to be revalued at the same rate. f) New profit-sharing ratio of partners will be 5:3:2. g) Ranvijay will bring ₹ 1,00,000 as capital and his share of goodwill which was valued at twice the average profit of the last three years ended 31st March 2023, 2022 and 2021 were ₹ 1,50,000, ₹ 1,30,000 and ₹ 1,70,000 respectively. Pass necessary journal entries.
OR
L, M and N were partners in a firm sharing profit & losses in the ratio of 2:2:3 . On 31st March 2023, their Balance Sheet was as follows:
On 31st March 2023 , M retired from the firm and remaining partners decided to carry on business. It was decided to revalue assets and liabilities as under :
a) Land and Building be appreciated by₹ 2,40,000 and Machinery be depreciated 10%. b) 50% of investments were taken by the retiring partner at book value. c) Provision for doubtful debts was to be made at5% on debtors. d) Stock will be valued at market price which is ₹1,00,000 less than the book value. e) Goodwill of the firm be valued at ₹5,60,000. L and N decided to share future profits and losses in the ratio of 2:3. f) The total capital of the new firm will be ₹32,00,000 which will be in proportion of profit - sharing ratio of L and N. g) Gain on revaluation account amounted to ₹1,05,000.
Prepare Partner’s Capital accounts and Balance sheet of firm after M’s retirement.
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