7. The balance sheet of Medha and radh who share profit and loss in the ratio 3:1 is an follows:

 Balance Sheet as on 31 March 2018

Liabilities	Amount	Assets	Amount
Sundry Creditors	80,000	Cash	78,000
Bills Payable	20,000	Sundry Debtors	64,000
Bank Overdraft	20,000	Sock	40,000
Capital A/c:		Plant & machinery	60,000
Medha	1,20,000	Furniture	22,000
Radha	40,000	Land & building	32,000
General Reserve	16,000
	2,96,000		2,96,000

They decided to admit krutika on 1st April 2018 on the following terms:

1. Krutika is taken as partner on 1st April 2018 she will pay 40,000 as her capital for 1/5 share in futue profits and ₹2,500 as goodwill.

2. A 5% provision for bad and doubtful debts be created on debtors.

3. Furniture be depreciation by 20% 

4. Stocks be appreciated by 5% and plant & Machinery by 20% 

5. The capital accounts of all partners be adjusted in their new profit sharing ratio by adjusting amount through loan

6. The new profit sharing ratio will be 3/5 1/5 1/5 respectively.

You are required to prepare profit and loss adjustment A/c, Partner's capital A/c, Balance Sheet of the new firm.

Solution:

In the Books of Medha, Radha and Krutika Partnership Firm

Revaluation Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To R.D.D.	3,200	By Stock	2,000
To Furniture	4,400	By Plant & Machinery	12,000
To Profit	6,400
	14.000		14,000

Partner's Capital Account

Dr. Cr.

Particulars	Medha	Radha	Krutika	Particulars	Medha	Radha	Krutika
				By Balance	1,20,000	40,000
				By general Reserve	12,000	4,000
				By Balance			40,000
To Partners loan A/c	18,675	6,225		By revaluation profit	4,800	1,600
To Balance	1,20,000	40,000	40,000	By Goodwill	1,875	625
	1,38,675	46,225	40,000		1,38,675	46,225	40,000

Balance Sheet as on 1.04.2019

Cr. Dr.

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital A/c:			Debtors	64,000
Medha	1,20,000		(-) R.D.D.	3,200	60,800
Radha	40,000		Stock	40,000
Krutika	40,000	2,00,000	(+) Appreciation	2,000	42,000
			Plant & machinery	60,000
Loan A/c			(+) Appreciation	12,000	72,000
Medha	18,675		Furniture	22,000
Radha	6,225	24,900	(-) Depreciation	4,400	17,600
Creditors		80,000	Land & Building		32,000
Bill Payable		20,000
Bank Overdraft		20,000	Cash at bank		1,20,500
		3,44,900			3,44,900

Goodwill Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Medha	1,875	By Cash A/c	2,500
T Radha	625
	2,500		2,500

Cash/Bank Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Balance b/d	78,000
To Krutika	40,000
To Goodwill	2,500	By Balance	1,20,500
	1,20,500		1,20,500