Answered

Assets
Amt. ()
49,000
Cash at Bank
4,000
Capital:
Building
20,000
Prathamesh
28,000
Machinery
28,000
Shiv
28,000
Furniture
1,200
Stock
16,400
Debtors
36,000
1,05,600
1,05,600
They take Ajay into partnership on 1st April, 2020. The terms being:
(1) Ajay shall pay 4,000 as his share of Goodwill, the amount to be retained in business.
(2) He shall bring in 12,000 as capital for 1/4th share in the future profits.
(3) The firm's assets were to be revalued as under:
Building 24,000, Machinery and Furniture to be reduced by 10%, a provision of 5% on
debtors is to be made for doubtful debts; stock is to be taken at a value of
20,000.
Prepare:
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Answer :

piyush933

Answer:

To prepare the required financial statements and adjustments for taking Ajay into the partnership, follow these steps:

### Revaluation Account

Revalue the firm's assets and liabilities to reflect their fair values.

**Revaluation Account**

| **Particulars** | **Amt. (₹)** | **Particulars** | **Amt. (₹)** |

|--------------------------|---------------|-------------------------------|---------------|

| To Machinery (10% of 28,000) | 2,800 | By Building (24,000 - 20,000) | 4,000 |

| To Furniture (10% of 1,200) | 120 | By Stock (20,000 - 16,400) | 3,600 |

| To Provision for Doubtful Debts (5% of 36,000) | 1,800 | | |

| To Capital Accounts (Bal. Fig.) (Profit) | 2,880 | | |

| **Total** | 7,600 | **Total** | 7,600 |

**Capital Accounts: Prathamesh and Shiv**

| **Particulars** | **Prathamesh (₹)** | **Shiv (₹)** |

|--------------------------|--------------------|---------------|

| To Revaluation Account | 1,440 | 1,440 |

| By Balance b/d | 28,000 | 28,000 |

| By Revaluation Account | 1,440 | 1,440 |

| By Goodwill brought in by Ajay (1/4) | 1,000 | 1,000 |

| **Balance c/d** | 27,000 | 27,000 |

### Bank Account

Reflect Ajay's capital contribution and goodwill.

**Bank Account**

| **Particulars** | **Amt. (₹)** | **Particulars** | **Amt. (₹)** |

|---------------------------|---------------|-----------------------------|---------------|

| To Ajay's Capital (Goodwill) | 4,000 | By Balance c/d | 16,000 |

| To Ajay's Capital | 12,000 | | |

| **Total** | 16,000 | **Total** | 16,000 |

### Ajay's Capital Account

| **Particulars** | **Amt. (₹)** | **Particulars** | **Amt. (₹)** |

|---------------------------|---------------|-----------------------------|---------------|

| By Bank (Goodwill) | 4,000 | To Goodwill Account | 4,000 |

| By Bank | 12,000 | To Capital Account | 12,000 |

| | | To Balance c/d | |

| **Total** | 16,000 | **Total** | 16,000 |

### Balance Sheet as of 1st April, 2020 (after admission)

**Balance Sheet**

| **Liabilities** | **Amt. (₹)** | **Assets** | **Amt. (₹)** |

|---------------------------|---------------|-----------------------------|---------------|

| Capital: | | Building | 24,000 |

| Prathamesh | 27,000 | Machinery (28,000 - 2,800) | 25,200 |

| Shiv | 27,000 | Furniture (1,200 - 120) | 1,080 |

| Ajay | 16,000 | Stock | 20,000 |

| Provision for Doubtful Debts | 1,800 | Debtors (36,000 - 1,800) | 34,200 |

| | | Bank | 16,000 |

| | | | |

| **Total** | 71,800 | **Total** | 71,800 |

This process shows the adjustments and final balances after Ajay's admission into the partnership.

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