Answer :
Certainly! Let's go through the steps and computations in detail.
### Profit and Loss Adjustment Account:
This account adjusts the values of assets and liabilities based on the changes mentioned in the conditions.
Adjustments:
1. Stock Reduction:
- Stock is reduced by 10%.
[tex]\[ \text{New Stock} = 30,000 - (30,000 \times 10\%) = 30,000 - 3,000 = 27,000 \][/tex]
2. Furniture Reduction:
- Furniture is reduced by 20%.
[tex]\[ \text{New Furniture} = 2,250 - (2,250 \times 20\%) = 2,250 - 450 = 1,800 \][/tex]
3. Provision for Doubtful Debts (RDD):
- R.D.D is provided at 5% on debtors.
[tex]\[ \text{RDD} = 24,000 \times 5\% = 1,200 \][/tex]
- Debtors after RDD:
[tex]\[ \text{New Debtors} = 24,000 - 1,200 = 22,800 \][/tex]
4. Appreciation in Land and Building:
- Land and building appreciated by 20%.
[tex]\[ \text{New Land and Building} = 37,500 + (37,500 \times 20\%) = 37,500 + 7,500 = 45,000 \][/tex]
### Partner’s Capital Accounts:
Mahesh is admitted into the firm and:
- He pays Rs. 30,000 as capital for 1/5 share.
- He pays Rs. 6,000 as goodwill.
Distribution of Goodwill:
- The goodwill is distributed between Deepak and Champak in their profit-sharing ratio of 3:1.
- Deepak’s share of goodwill:
[tex]\[ \text{Deepak's Goodwill} = 6,000 \times \frac{3}{4} = 4,500 \][/tex]
- Champak’s share of goodwill:
[tex]\[ \text{Champak's Goodwill} = 6,000 \times \frac{1}{4} = 1,500 \][/tex]
New Capitals:
- Deepak’s new capital:
[tex]\[ \text{Deepak's New Capital} = 45,000 + 4,500 = 49,500 \][/tex]
Plus Mahesh’s capital contribution:
[tex]\[ 30000 \times \frac{2}{5} = 30000 \times 0.4 = 12,000 \][/tex]
Therefore, Deepak's new capital is:
[tex]\[ \text{Deepak's New Capital} = 49,500 + 12,000 = 61,500 \][/tex]
- Champak’s new capital:
[tex]\[ \text{Champak's New Capital} = 25,000 + 1,500 = 26,500 \][/tex]
Plus Mahesh’s capital contribution:
[tex]\[ 30000 \times \frac{1}{5} = 30000 \times 0.2 = 6,000 \][/tex]
Therefore, Champak's new capital is:
[tex]\[ \text{Champak's New Capital} = 26,500 + 6,000 = 32,500 \][/tex]
- Mahesh’s new capital:
[tex]\[ \text{Mahesh's New Capital} = 30,000 - 6,000 \times \frac{1}{5} = 30,000 - 1200 = 28,800 \][/tex]
### New Balance Sheet:
After adjustments and Mahesh’s admission, the balance sheet of the firm will be:
#### Assets Side:
1. Cash in hand: Rs. 5,750
2. Bills receivable: Rs. 9,000
3. Debtors: Rs. 22,800
4. Stock: Rs. 27,000
5. Furniture: Rs. 1,800
6. Land and Building: Rs. 45,000
#### Liabilities Side:
1. Creditors: Rs. 28,000
2. Bills payable: Rs. 4,500
3. General reserve: Rs. 6,000
4. Partners’ Capitals:
- Deepak: Rs. 61,500
- Champak: Rs. 32,500
- Mahesh: Rs. 28,800
Total Assets:
[tex]\[ 5,750 + 9,000 + 22,800 + 27,000 + 1,800 + 45,000 = 111,350 \][/tex]
Total Liabilities:
[tex]\[ 28,000 + 4,500 + 6,000 + 61,500 + 32,500 + 28,800 = 161,300 \][/tex]
In summary, the final solution is:
- Profit and Loss Adjustment Account: Rs. 4,800
- New Capitals:
- Deepak: Rs. 61,500
- Champak: Rs. 32,500
- Mahesh: Rs. 28,800
- Total Assets: Rs. 111,350
- Total Liabilities: Rs. 161,300
### Profit and Loss Adjustment Account:
This account adjusts the values of assets and liabilities based on the changes mentioned in the conditions.
Adjustments:
1. Stock Reduction:
- Stock is reduced by 10%.
[tex]\[ \text{New Stock} = 30,000 - (30,000 \times 10\%) = 30,000 - 3,000 = 27,000 \][/tex]
2. Furniture Reduction:
- Furniture is reduced by 20%.
[tex]\[ \text{New Furniture} = 2,250 - (2,250 \times 20\%) = 2,250 - 450 = 1,800 \][/tex]
3. Provision for Doubtful Debts (RDD):
- R.D.D is provided at 5% on debtors.
[tex]\[ \text{RDD} = 24,000 \times 5\% = 1,200 \][/tex]
- Debtors after RDD:
[tex]\[ \text{New Debtors} = 24,000 - 1,200 = 22,800 \][/tex]
4. Appreciation in Land and Building:
- Land and building appreciated by 20%.
[tex]\[ \text{New Land and Building} = 37,500 + (37,500 \times 20\%) = 37,500 + 7,500 = 45,000 \][/tex]
### Partner’s Capital Accounts:
Mahesh is admitted into the firm and:
- He pays Rs. 30,000 as capital for 1/5 share.
- He pays Rs. 6,000 as goodwill.
Distribution of Goodwill:
- The goodwill is distributed between Deepak and Champak in their profit-sharing ratio of 3:1.
- Deepak’s share of goodwill:
[tex]\[ \text{Deepak's Goodwill} = 6,000 \times \frac{3}{4} = 4,500 \][/tex]
- Champak’s share of goodwill:
[tex]\[ \text{Champak's Goodwill} = 6,000 \times \frac{1}{4} = 1,500 \][/tex]
New Capitals:
- Deepak’s new capital:
[tex]\[ \text{Deepak's New Capital} = 45,000 + 4,500 = 49,500 \][/tex]
Plus Mahesh’s capital contribution:
[tex]\[ 30000 \times \frac{2}{5} = 30000 \times 0.4 = 12,000 \][/tex]
Therefore, Deepak's new capital is:
[tex]\[ \text{Deepak's New Capital} = 49,500 + 12,000 = 61,500 \][/tex]
- Champak’s new capital:
[tex]\[ \text{Champak's New Capital} = 25,000 + 1,500 = 26,500 \][/tex]
Plus Mahesh’s capital contribution:
[tex]\[ 30000 \times \frac{1}{5} = 30000 \times 0.2 = 6,000 \][/tex]
Therefore, Champak's new capital is:
[tex]\[ \text{Champak's New Capital} = 26,500 + 6,000 = 32,500 \][/tex]
- Mahesh’s new capital:
[tex]\[ \text{Mahesh's New Capital} = 30,000 - 6,000 \times \frac{1}{5} = 30,000 - 1200 = 28,800 \][/tex]
### New Balance Sheet:
After adjustments and Mahesh’s admission, the balance sheet of the firm will be:
#### Assets Side:
1. Cash in hand: Rs. 5,750
2. Bills receivable: Rs. 9,000
3. Debtors: Rs. 22,800
4. Stock: Rs. 27,000
5. Furniture: Rs. 1,800
6. Land and Building: Rs. 45,000
#### Liabilities Side:
1. Creditors: Rs. 28,000
2. Bills payable: Rs. 4,500
3. General reserve: Rs. 6,000
4. Partners’ Capitals:
- Deepak: Rs. 61,500
- Champak: Rs. 32,500
- Mahesh: Rs. 28,800
Total Assets:
[tex]\[ 5,750 + 9,000 + 22,800 + 27,000 + 1,800 + 45,000 = 111,350 \][/tex]
Total Liabilities:
[tex]\[ 28,000 + 4,500 + 6,000 + 61,500 + 32,500 + 28,800 = 161,300 \][/tex]
In summary, the final solution is:
- Profit and Loss Adjustment Account: Rs. 4,800
- New Capitals:
- Deepak: Rs. 61,500
- Champak: Rs. 32,500
- Mahesh: Rs. 28,800
- Total Assets: Rs. 111,350
- Total Liabilities: Rs. 161,300
