Gautam and Rahul are partners in a firm, sharing profits and losses in the ratio of 2 : 3. Their Balance Sheet as at 31st March, 2014, was as follows :
Karim was to be taken as a partner with effect from 1st April. 2014. on the following terms :
(a) The new profit sharing ratio of Gautam. Rahul and Karim would be 5 : 3 : 2.
(b) Provision for Doubtful Debts would be raised to 20% of debtors.
(c) Karim would bring in cash, his share of capital of Rs 40,000 and his share of goodwill valued at Rs 10,000.
(d) Gautam would take over the furniture at Rs 22,000
You are required to:
(i) Pass journal entries at the time of Karim’s admission.
(ii) Prepare the Balance Sheet of the reconstituted firm.
