The balance sheet of Shrihas and Madan as on 31st March, 2012 is set out below, they share profits and losses in the ratio of 2:1.

The balance sheet of Shrihas and Madan as on 31^st March, 2012 is set out below, they share profits and losses in the ratio of 2:1. 

Balance sheet as on 31^st March, 2012   

  

Liabilities	Amount	Assets	Amount
Shrihas's Capital	40000	Building	20000
Madan's capital	30000	Furniture	6000
General Reserve	24000	Stock	12000
Creditors	16000	Debtors	60000
		Cash	6000
		Profit & Loss A/c	6000
	110000		110000

On 1st April, 2012, they agreed to admit Prasanna as a partner into the firm on the following terms:

1. Prasanna to bring Rs. 12,000 as capital and Rs. 9,000 as a Goodwill which is to ratained in the business. He will be entitled to 1/4^th share of profits of the firm.

2. 50% of General Reserve is to remain as Reserve for Doubtful Debts.

3. Furniture is to be depreciated by 5%.

4. Stock is to be revalued Rs. 13,000.

5. Creditors of Rs. 1000 are not likely to claim and hence should be written off.

6. Rent of Rs. 400 due not received has not been recorded in the books. 

Prepare Profit and Loss Adjustment A/c, Partner's Capital A/c and Balance sheet of the firm after admission of Prasanna. 

Ans.

Profit and loss adjustment a/c Profit: 2100

Balance sheet total = Rs. 114100

Cash A/c Balance = 27000

Capital A/c Shrihas = 51400, Madan = 35700, Prasanna = 12,000