Raj and Dev are partners sharing profits and losses 3:2 respectively. Their position on 31 March, 2011
Balance Sheet as on 31 March, 2011
On 1 April, 2011 they admitted Manoj on following terms:
1) Manoj should bring in cash Rs 1,00,000 as a capital for 1/5 share in future profit and Rs 25,000 as goodwill.
2) Building should be revalued for Rs 1,25,000.
3) Depreciate furniture at 12 ½ % p.a. and stock at 10% p.a.
4) R.D.D. should be maintained as it is.
5) The Capital accounts of partners should be adjusted in their new profit sharing ratio through bank account.
Prepare, Profit and Loss Adjustment Account, Capital Accounts, Balance Sheet of new firm and show how you have calculated new ratio and new capital.
Solution:
