Annie and Bonnie are partners in a firm, sharing profits and losses equally. Their Balance Sheet as at 31 st March, 2017. was as follow :
Carl was to be taken as a partner for 1/4 share in the profits of the firm, with effect from 1st April, 2017, on the following terms :
(a) Bad debts amounting to Rs 1,500 to be written off.
(b) Stock to be taken over by Annie at Rs 12.000.
(c) Plant and Machinery to be valued at Rs 50.000.
(d) Goodwill of the firm to be valued at Rs 20.000.
(e) Carl to bring in Rs 50.000 as his capital. He was unable to bring in cash, his share of goodwill.
(f) General Reserve not to be distributed. For this, it was decided that Carl would compensate the old partners through his current account.
You are required to :
(i) Pass journal entries on the date of Carl’s admission.
(ii) Prepare the Balance Sheet of the reconstituted firm.
