Vaibhav and Vikas were partners sharing profit and losses in the ratio of 2:3 respectively. Their Balance Sheet as on 31st March, 2012 was as follows:

Balance Sheet as on 31^st March, 2012

Liabilities	Amount	Assets	Amount
Capital A/c		Land & Building	25000
Vaibhav	50000	Plant	30000
Vilas	50000	Furniture	2000
Creditors	70000	Stock	50000
		Debtors	58000
		Cash	5000
	170000		170000

They agreed to admit Vivek as a partner on 1^st April, 2012 on the following terms.

1. Vivek will have ¼ th share in future profits for which he shall bring Rs. 25,000 as his capital and Rs. 20,000 as his share of goodwill.

2. Land and Building are valued at Rs. 30,000 wh8ile stock is valued at Rs. 55,000.

3. Plant is taken over by Vilas at 10% Discount.

4. Depreciate furniture by 10%.

5. Provision for bad and doubtful debts is to be maintained at 5% on debtors.

6. The capital accounts of all the partners to be adjusted in their new profit sharing ratio and excess amount to be transferred to their loan accounts.

Prepare Profit and Loss Adjustment Account, Partner's Capital Accounts and Balance Sheet of New Firm.

Solution.

In the books of Partnership firm.

Profit and Loss Adjustment Account

Particulars	Rs.	Rs.	Particulars	Rs.	Rs.
To Plant		3000	By Land & Building A/c		5000
To Furniture A/c		200	By Stock		5000
To R.D.D. A/c		2900
To Partners' Capital A/c
Vaibhav	1560
Vilas	2340	3900
		10000			10000

Partner's Capital Accounts

Particulars	Vaibhav	Vilas	Vivek	Particulars	Vaibhav	Vilas	Vivek
To Plant A/c	-	27000	-	By Balance b/d	50000	50000	-
To Partner's Loan A/c	29560	-	-	By Cash A/c	-	-	25000
To Balance C/d	30000	45000	25000	By Goodwill A/c	8000	12000	-
				By Profit & Loss Adjustment A/c	1560	7660
				By Partner's Loan A/c [Deficit Transferred]	-	7660	-
	59560	72000	25000		59560	72000	25000

Balance Sheet as on 1^st April, 2013

Liabilities	Amount	Amount	Assets	Amount	Amount
Partners' Capital A/c			Land & Building	25000
Vaibhav	30000		(+) Appreciation	5000	30000
Vilas	45000		Plant	30000
Vivek	25000	100000	(-) Discount @ 10%	-3000
Loan from Vaibhav		29560		27000
Creditors		70000	(-) Plant taken over by Vilas	27000	NIL
			Furniture	2000
			(-) Depreciation @ 10%	-200	1800
			Debtors	58000
			(-) Less Provision for bad and Doubtful debts @ 5%	-2900	55100
			Stock	50000
			(+) Increase in Value	5000	55000
			Cash		50000
			Loan to Vilas		7660
		199560			199560