A and B are partners in a firm sharing profits in the ratio of 2:1 ‘C’ is admitted into the firm with 1/4 share in Profits. He will bring in Rs. 30,000 as capital and capital of A and B are to be adjusted in the profit sharing ratio. The balance sheet of A and B as on 31/03/2017 (before c’s admission) was as under. Balance sheet of A and B as on 31/03/2017
The terms of agreement are as follows:
1. ‘C’ will bring in Rs. 12,000ashisshareofgoodwill.
2. Building was valued at Rs. 45,000 and Machinery at Rs. 23,000
3. A provision for bad debts is to be created @ 6% on debtors
4. The capital accounts of A and B are to be adjusted by opening current accounts.
Prepare necessary ledger accounts and new balance of the firm.
