A and B are partners in a firm sharing profits and losses in the ratio 3 : 1. They admit C for 1/4th share on 31st March, 2014 when their Balance Sheet was as follows:

LiabilitiesAmount (Rs.)AssetsAmount
Employees Provident Fund17,000Cash6,100
Workmen Compensation Reserve     6,000Stock15,000
Investment Fluctuation Reserve4,100Debtors – 50,000
Capital’s A/c : Less : Provision for Doubtful Debts – (2,000)48,000
A – 54,000Investments7,000 
B – 35,00089,000Goodwill40,000 

The following adjustments were agreed upon:
(a) C brings in Rs. 16,000 as goodwill and proportionate capital.
(b) Bad debts amounted to Rs. 3,000.
(c) Market value of investment is Rs. 4,500.
(d) Liability on account of Workmen Compensation Reserve amounted to Rs. 2,000.
Prepare Revaluation Account and Partners’ Capital Accounts.


Leave a Reply