The following was the Balance Sheet of Arun, Bablu and Chetan sharing profits and losses in the ratio of 6/14 :5/14 : 3/15 respectively:
They agreed to take Deepak into partnership and give him a share of 1/8 on the following terms:
(a) that Deepak should bring in Rs. 4,200 as goodwill and Rs. 7,000 as his Capital;
(b) that furniture be depreciated by 12%;
(c) that stock be depreciated by 10%;
(d) that a Reserve of 5% be created for doubtful debts;
(e) that the value of land and buildings having appreciated be brought upto? 31,000 (1) that after making the adjustments the capita! accounts of the old partners (who continue to share in the same proportion as before) be adjusted on the basis of the proportion of Deepak’s Capital to his share in the business, i.e., actual cash to be paid off to, or brought in by the old partners as the case may be.
Books of Arun, Bablu, Chetan and Deepak
Prepare Cash Account, Profit and Loss Adjustment Account (Revaluation Account) and the Opening Balance Sheet of the new firm.
