Rajesh and Ravi are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet at 31st March, 2019 stood as:

BALANCE SHEET as at 31st March, 2019

Outstanding Rent4,000Stock15,000
Capital A/c :Prepaid Insurance1,500
Rajesh – 29,000Debtors – 9,400
Ravi – 15,00044000Less : Provision for Doubtful Debts – (400)9,000
 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.


Leave a Reply