Question - 25 

Ravi, Som and Mangal shares prfits and losses in the ratio of 2:3:5 their Balance sheet as on 31st Dec., 2007 is as under :

Liabilities : General reserve Rs. 18,000, Creditors Rs. 12,000, Capital A/c : Ravi, Som and Mangal are Rs. 20,000, 18,000 and 16,000.

Assets : Building Rs. 40,000, Furniture Rs. 20,000, Debtors Rs. 15,000 and Cash Rs. 9,000.

Mangal retires on 1st January 2008. Keeping in mind the following prepare profit and loss adjustment account and capital account.

  1. Increase buliding and funiture by 5%.
  2. Provision for doubtful debts at 10% on debtors.
  3. Discount on creditors at 5%.
  4. Legal expenses Rs. 200.
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