A and B are partners in a firm sharing profits and losses in 7:3. The balance sheet as at 31.3.2018 is as follows:On 1.4.2018 C joins the firm as a 3rd partner for 1/4th share of the future profits of the firm on the following terms:

(a) Goodwill is valued at ₹40,000 and C is to bring the necessary amount in cash as premium for goodwill.

(b) 20% of the reserve is to remain as a provision against bad and doubtful debts.

(c) Stock-in-trade is to be reduced by 40% and furniture is to be reduced to 40%.

(d) A is to pay off the Bank overdraft.

(e) C is to introduce ₹30,000 as his share of capital to which amount other partners’ capital shall have to be adjusted. You are required to show the necessary journal entries to carry out the above transactions and prepare an amended Balance Sheet of the firm immediately after C has become a partner.

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Sundry Creditors Bank overdraft Reserve Capital A Capital B - Liabilities ₹ 40,000 Cash in hand 20,000 Sundry Debtors 10,000 Less: Provision for bad debts 50,000 Furniture 40,000 Stock in trade 1,60,000 Assets 46,000 2,000 ₹ 36,000 44,000 30,000 50,000 1,60,000