omtexclasses.com: Snehal and Meenal are equal partners in a business. Their Balance Sheet is as follows:

Balance Sheet as on 31^st March, 2012

They agreed to admit Kamal on 1^st April, 2012 on the following terms:

1. She should bring Rs. 50000 towards her capital for ¼ th share in future profit.

2. Goodwill A/c be raised in the books of the firm for Rs. 40,000.

3. R.D.D. to be maintained at 5% on debtors.

4. Premises to be valued at Rs. 30,000 and Equipments to be written off fully.

5. Interest at the rate of 15% p.a. is due on bank loan.

6. Creditors allowed a discount of Rs. 1,100 and they were paid off immediately.

Pass necessary Journal Entries to record the above scheme of admission.

Solution:

Journal Entries in the Books of New Partnership Firm.

Date	Particulars	L.F.	Debit	Credit
2012 April 1.	Snehal's Capital A/c ....Dr.		3300
	Meenal's Capital A/c ....Dr.		3300
	To Profit and Loss A/c			6600
	[Being debit balance of Profit and Loss A/c transferred to old partners' capital A/c ]
1.	Bank A/c ....Dr.		50000
	To Kamal's Capital A/c			50000
	[Being Capital bought in by Kamal]
1.	Goodwill A/c ....Dr.		40000
	To Snehal's Capital A/c			20000
	To Meenal's Capital A/c			20000
	[Being Goodwill raised]
1.	Profit & Loss Adjustment A/c ....Dr.		6500
	To Equipment A/c			5000
	To Interest on Bank Loan A/c			1500
	[Being the value of equipment written off and interest due on Bank Loan]
1.	R.D.D. A/c ....Dr.		5500
	Premises A/c		9500
	To Profit & Loss Adjustment A/c			15000
	[Being R.D.D. reduced and the value of premises increased]
1.	Creditors A/c ....Dr.		26000
	To Bank A/c			24900
	To Profit & Loss Adjustment A/c			1100
	[Being creditors paid under discount]
1.	Profit & Loss Adjustment A/c ....Dr.		9600
	To Snehal's Capital A/c			4800
	To Meenal's Capital A/c			4800
	[Being Profit on revaluation divided and transferred to old partners capital account]

omtexclasses.com