The following is the Balance sheet of L & M as on 30th June 2005.
L & M were sharing profits and losses in the ratio of 2:1. N is admitted into the firm for a fourth share.
The following are the conditions agreed upon.
1. Provision for bad and doubtful debts be increased to Rs. 2,500
2. Land and Buildings was to be depreciated by Rs. 10,000
3. The firm had an unrecorded machinery of Rs. 10,000 which is to be recorded.
4. N is asked to bring Rs. 50,000 as his capital and Rs. 15,000 for good will.
5. L & M had to withdraw half of the goodwill brought in by N.
Record journal entries, prepare Profit Loss adjustment account, capital accounts, and the New Balance Sheet
