Neha& Co. is a partnership firm with partners Mr. P, Mr. Q and Mr. R, sharing profits
and losses in the ratio of 10,6:4. The balance sheet of the firm os at 31 st March, 2018 is
as under:
Liabilities
Assets
Capitals:
Land
10,000
Mr.P
80,000
Buildings
2,00,000
Mr. Q
20,000
Plant and machinery 1,30,000
Mr. R
30,000 1,30,000 Furniture
43,000
Investments
12,000
Reserves
1,30,000
(un-appropriated
20,000 Inventories
profit)
Long Term Debt
3,00,000
1,39,000
Trade receivables
Bank Overdraft
44,000
Trade payables
1,70,000
6,64,000
6,64,000
It was mutually agreed that Mr. Q will retire from partnership and in his place Mr. T will
be admitted as a partner with effect from 1st April, 2018. For this purpose, the following
adjustments are to be made:
(a)
Goodwill is to be valued at 1 lakh but the same will not appear as an asset in the
books of the reconstitutedfirm.
(b) Buildings and plant and machinery are to be depreciated by 5% and 2096
respectively. Investments are to be taken over by the retiring partner at 715,000.
Provisionof20%/stobemadeon Tradereceivablestocoverdoubtfuldebts.
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