Ashish, Aakash and Amit are partners sharing profits and losses equally. The Balance Sheet as at 31st March, 2019 was as follows:
|
Liabilities
|
Amount
|
Assets
|
Amount
|
|
Sundry Creditors
|
75,000
|
Cash in Hand
|
24,000
|
|
General Reserve
|
90,000
|
Cash at Bank
|
1,40,000
|
|
Capital A/cs:
|
|
Sundry Debtors
|
80,000
|
|
Ashish 3,00,000
|
|
Stock
|
1,40,000
|
|
Aakash 3,00,000
|
|
Land and Building
|
4,00,000
|
|
Amit 2,75,000
|
8,75,000
|
Machinery
|
2,50,000
|
|
|
|
|
Advertisement
|
6,000
|
|
|
Suspense
|
|
|
10,40,000
|
|
10,40,000
|
|
|
|
|
The partners decided to share profits in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2019. They also decided that:
i
Value of stock to be reduced to 1,25,000.
ii
Value of machinery to be decreased by 10%.
iii
Land and Building to be appreciated by 62,000.
iv
Provision for Doubtful Debts to be made @ 5% on Sundry Debtors.
v
Aakash was to carry out reconstitution of the firm at a remuneration of 10,000. Pass necessary Journal entries to give effect to the above.