Rajan & Padam are equal partners in a business. Their Balance Sheet as on 31st March, 2012 stood as under.

7. Rajan & Padam are equal partners in a business. Their Balance Sheet as on 31^st March, 2012 stood as under.

Balance sheet as on 31^st March, 2012

Liabilities	Rs.	Assets	Rs.
Sundry Creditors	40000	Cash at Bank	60000
Bank Overdraft	20000	Debtors	30000
Bills Payable	30000	Furniture	12000
Reserve	18000	Machinery	24000
Capitals:		Building	27000
Rajan	45000
Padam	30000
	183000		183000

On 1^st April, 2012, they decide to admit Sharad on the following terms:

1. The Machinery, Building & Furniture be depreciated by 5%.

2. The Reserve at 5% be created for doubtful debts on debtors.

3. The Goodwill account for Rs. 30,000 be opened in the firm's book.

4. Sharad should bring Rs. 40000 as capital for his ¼ th share in the future profits.

5. The capital accounts of all the partners be adjusted in proportion to the new profit sharing ratio.

Prepare Profit & Loss Adjustment account and the balance sheet of the firm after admission of Sharad.

Ans.
Profit and loss adjustment a/c	Loss Rs. 6150
Balance sheet total	250000
Bank A/c Bal	103150
Capital A/c
Rajan	60000
Padam	60000
Sharad	40000