Question - 35 

The balance sheet of Rajesh, Pramod and Nishant who were sharing profit in proportion to their capitals stood as on March 31st, 2007.

Liabilties : Bills payable Rs. 6,250, Creditors Rs. 10,000, Rajesh Capital Rs. 20,000, Pramod Capital Rs. 15,000,Nishant Capital Rs. 15,000.

Assets : Building Rs. 12,000, Debtors Rs. 10,000, Bill receivable Rs. 7,000, Stock Rs. 15,500, Plant and machine Rs. 11,500, Bank Rs. 13,000.

Pramod retired on the date of Balance sheet and the following adjustments were made:

  1. Stock was valued at 10% less than the book value.
  2. Building were appreciated by 12%.
  3. Reserve for doubtful debts be created up to 5%.
  4. Reserve for legal chargeds to be made at Rs. 265.
  5. Goodwill of the firm will be Rs. 10,000.
  6. The goodwill of firm be fixed at Rs. 30,000. the continuing partners decided to keep their capitals in the new profit sharing ratio of 3:2.
Pass journal entries and prepare the Balance Sheet of the reconstituted firm after transferring the balance in pramod's capital A/c to his loan account.

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