Vaibhav and Vilas were partners sharing profit and losses in the ratio of 2:3 respectively. Their Balance Sheet as on 31 March, 2012 was as follows.

Vaibhav and Vilas were partners sharing profit and losses in the ratio of 2:3 respectively. Their Balance Sheet as on 31 March, 2012 was as follows.

Balance Sheet as on 31 March, 2012

They agreed to admit Vivek as a partner on 1 April 2012 on the following terms:

1) Vivek will have 1/4 share in future profits for which he shall bring Rs 25,000 as his capital and Rs 20,000 as his share of goodwill.

2) Land & Building are valued at Rs 30,000 and while stock is valued at Rs 55,000.

3) Plant is taken over by Vilas 10% discount.

4) Depreciate furniture by 10%.

5) Provision for bad and doubtful debts is to be maintained at 5% on debtors.

6) The capital account of all the partners to be adjusted in their new profit sharing ratio and excess amount to be transferred to their loan account.


Solution: