BALANCE SHEET as at 31st March, 2019
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| Creditors | 38,500 | Cash | 2,000 |
| Outstanding Rent | 4,000 | Stock | 15,000 |
| Capital A/c : | Prepaid Insurance | 1,500 | |
| Rajesh – 29,000 | Debtors – 9,400 | ||
| Ravi – 15,000 | 44000 | Less : Provision for Doubtful Debts – (400) | 9,000 |
| Machinery | 19,000 | ||
| Building | 35,000 | ||
| Furniture | 5,000 | ||
| 86,500 | 86,500 |
Raman is admitted as a new partner introducing a capital of Rs. 16,000. The new profit-sharing ratio is decided as 5 : 3 : 2. Raman is unable to bring in any cash for goodwill. So, it is decided to value the goodwill on the basis of Raman’s share in the profits and the capital contributed by him. Following revaluations are made:
(a) Stock to decrease by 5%.
(b) Provision for Doubtful Debts is to be Rs. 500.
(c) Furniture to decrease by 10%.
(d) Building is valued at Rs. 40,000.
Show necessary Ledger Accounts and Balance Sheet of new firm.
SOLUTION
