Swadesh and Swaraj were partners sharing profits equally. Their Balance Sheet as at 31st March, 2019 was:
Sambhav is admitted as a partner from 1st April, 2019 on the following terms:
(i) Sambhav will get 1/5th share in porfits and he will bring RS. 20,000 as his capital and RS.5,000 as his share of goodwill.
(ii) Goodwill brought by Sambhav will be withdrawn by Swadesh and Swaraj.
(iii) Provision for Doubtful Debts should be brought up to 5% on Debtors.
(iv) Machinery be reduced by RS.2,000 and Furniture 12.5%.
(v) Stock be valued at RS.23,000.
(vi) Land and Building be appreciated by 20%.
(vii) Investments of 2,000 which did not appear in books should be recorded.
(viii) Out of the amount of insurance premium which was debited to Profit and Loss Account, RS.5,000 be carried forward as unexpired insurance.
(ix) A bill for 5,000 for Electricity Expenses was not accounted.
Record necessary journal entries and prepare Balance Sheet of the new firm.
