Sai and Shankar are partners, sharing profits and losses in the ratio of 5:3. The firm’s balance sheet as on 31st December, 2017, was as follows:
| Liabilities |
Rs. |
Rs. |
Assets |
Rs. |
Rs. |
| Capital accounts: |
|
|
Building |
|
34,000 |
| Sai |
48,000 |
|
Furniture |
|
6,000 |
| Shankar |
40,000 |
88,000 |
Investment |
|
20,000 |
| Creditors |
|
37,000 |
Debtors |
40,000 |
|
| Outstanding wages |
|
8,000 |
Less: Provision for
bad debts |
3,000 |
37,000 |
| |
|
|
Bills receivable |
|
12,000 |
| |
|
|
Stock |
|
16,000 |
| |
|
|
Bank |
|
8,000 |
| |
|
1,33,000 |
|
|
1,33,000 |
On 31st December, 2017 Shanmugam was admitted into the partnership for 1/4 share of profit with Rs.12,000 as capital subject to the following adjustments.
(a) Furniture is to be revalued at Rs.5,000 and building is to be revalued at Rs.50,000.
(c) Provision for doubtful debts is to be increased to Rs.5,500
(d) An unrecorded investment of Rs.6,000 is to be brought into account
(e) An unrecorded liability Rs.2,500 has to be recorded now.
Pass journal entries and prepare Revaluation Account and capital account of partners after
admission.
