Question
A, B, and C were partners sharing profits and losses in the ratio of 2:2:1. C decided to retire on December 31,2013. The following is
A, B, and C were partners sharing profits and losses in the ratio of 2:2:1. C decided to retire on December 31,2013. The following is the balance sheet of partnership firm
BALANCE SHEET
December 31, 2013
Liabilities Rs. Assets Rs.
Sundry Creditors 10000 Stock of goods 10000
Reserve account 2000 Sundry Debtors 10000
Capital account A 24000 Bills receivable 4000
Capital account B 16000 Bank A/C 10000
Capital account C 12000 Land and building 30000
64000 64000
A and B decided to share profits and losses in the ratio of 3:2 in future. Goodwill is valued at Rs. 10000. Land and building was appreciated by Rs.6000 and stock by Rs.2000. There was bad debt loss of Rs.1000 but not recorded in books. A and B decided to bring sufficient cash to settle the account of C and to make their capital proportionate. They also decided to maintain Rs.15000 bank balances for meeting the day to day business expenses. Prepare necessary journal entries and prepare balance sheet of newly constituted firm.
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Managerial Accounting
Authors: Ray Garrison, Eric Noreen, Peter Brewer
15th edition
1259404781, 007802563X, 978-1259404788, 9780078025631, 978-0077522940
