Q. 15. A and B were partners in a firm sharing profits in 2 : I ratio. C was admitted as a new partner

for 1/4th share in the profits on 1.3.2006. The Balance Sheet of the firm on 28.2.2006 was as follows:

Liabilities Amount Rs. Assets Amount Rs.

Creditors

General Reserve

A’s Capital

B’s Capital

18,000

12,000

50,000

40,000

_______

1,20,000

Cash

Debtors

Stock

Furniture

Machinery

Building

14,000

12,000

17,000

9,000

22,000

46,000

1,20,000

C was admitted on the following terms: (8)

i. C will bring Rs. 45,000 for his capital and Rs. 18,000 for his share of good will/premium.

ii. Building was valued at Rs. 55,000 and machinery at Rs. 18,000.

iii. A provision of Rs. 500 was created for bad debts on debtors.

iv. The capital accounts of A and B were to be adjusted in profit sharing ratio. Necessary cash was

to be brought in or paid off to them as the case may be.

v. Prepare, Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of A, B and C.