Qno 1 (a) A and B were in partnership sharing profit and losses in the proportion of three fourth and one fourth respectively. Their balance Sheet stood as follows on 31^st December 2003. LIABILITIES ... Rs. Creditors ....... 37,500 Capital Account A ...... 40,000 B....... 10,000 TOTAL . 87,500 ASSETS ... Rs. Cash at bank ... 22,500 Bill receivable... 3,000 Book debts.. 16,000 Stock.... 20,000 Furniture.... 1,000 Building...... 25,000 TOTAL... 87,500 They admitted C into partnership 1^st January 2004 on the following terms:

1. The C pays Rs. 10,000 as his capital for 1/5 share in the future profits.
2. That goodwill for Rs. 20,000 is raised in the books of the new firm.
3. That stock and furniture are reduced by 10% and that a 5% provision is made for likely bad debts.
4. That the capital Accounts of A and B are readjusted on the basis of their profit sharing ratios.

Required: Pass the necessary journal entries and give the ledger Accounts and opening Balance Sheet of the new firm.

Qno 1 (b) S & Y are partners with profit sharing ratio as 2:1. The position of the firm 31st December 2004 when they decided to dissolve the business was as follows:

LIABILITIES ........... Rs. ...............ASSETS.................. Rs. Sundry creditor . 1,50,000 ... Plant & Machinery. 2,50,000 General Reserve. 1,50,000 .... Furniture..40,000 Capital accounts .X........ Stock...1,00,000 S 2,20,000 .. ...X ..........Debtors..2,00,000 Y 2,20,000 ..4,40,000.Cash at bank......... 1,00,000 TOTAL...... 6,90,000....TOTAL ... 6,90,000

The details or realization was as follows: 1. S took over plant & machinery and furniture at book value less 10% 2. Y took over the stock at Rs. 1,75,000 3. Debtors realized Rs. 1,85,000 4. Sundry creditors were settled at a discount of 5% Required: Prepare necessary journal entries and ledger accounts to close the books of the firm.