Question

Annie and Bonnie are partners in a firm, sharing profits and losses equally. Their Balance Sheet as at 31st March,
2017, was as follows:

                        Balance Sheet of Annie and Bonnie
                               As at 31st March, 2017

Liabilities	Amount Rs.	Assets	AmountRs.
Sundry Creditors	21,000	Cash at Bank	20,000
General Reserve	15,000	Sundry Debtors                   22,000 Less Provision for Doubtful Debts                    (1,000)	21,000
Capital A/c Annie 45,000 Bonnie40,000	85,000	Stock	10,000
		Plant & Machinery	60,000
		Goodwill	10,000
	1,21,000		1,21,000

Carl was to be taken as a partner for 1/4 share in the profits of the firm, with effect from 1st April, 2017, on the
following terms:
(a) Bad debts amounting to Rs. 1,500 to be written off.
(b) Stock to be taken over by Annie at Rs.12,000.

(c) Plant and Machinery to be valued at Rs. 50,000.
(d) Goodwill of the firm to be valued at Rs. 20,000.
(e) Carl to bring in Rs. 50,000 as his capital. He was unable to bring his share of goodwill in cash.
(f) General Reserve not to be distributed. For this, it was decided that Carl would compensate the old partners
through his current account.
You are required to:
(i) Pass journal entries on the date of Carl's admission.
(ii) Prepare the Balance Sheet of the reconstituted firm

Answer 1

                                   Journal

Date	Particulars	L.F.	Amount Rs.	Amount Rs.
	Bank A/c .... Dr  To Carl’s Capital A/c (Being cash brought in by Carl for Capital)		50,000	50,000
	Carl’s Current A/c  ..... Dr To Annie’s Capital A/c  To Bonnie’s Capital A/c 2,500 (Being old partners compensated for GW in the sacrificing ratio)		5,000	2,500   2,500
	Prov. for Doubtful Debts A/c ....  Dr Revaluation A/c .... Dr  To Debtors A/c (Being bad debts written off)		1,000 500	1,500
	Revaluation A/c ....Dr  To Plant and Machinery A/c (Being loss on plant and machinery)		10,000	10,000
	Stock A/c ...Dr  To Revaluation A/c (Being stock revalued)		2,000	2,000
	Annie’s Capital A/c Dr  Bonni’s Capital A/c Dr  To Revaluation A/c  (Being loss on revaluation written off in OR)		4,250 4,250	8,500
	Annie’s Capital A/c.. Dr  To Stock A/c 12 (Being stock taken over by Annie)		12,000	12,000
	Annie’s Capital A/c ..Dr  Bonnie’s Capital A/c  Dr  To Goodwill A/c  (Being Goodwill written off in OR)		5,000 5,000	10,000
	Carl’s Current A/c... Dr  To Annie’s Capital A/c  To Bonnie’s Capital A/c  (Being old partners compensated for G Reserve in the SR)		3,750	1,875 1,875

Working Notes :

                      Partners’ Capital Accounts 

Particular	Annie	Bonnie	Carl	Particular	Annie	Bonnie	Carl
To Revaluation A/C	4,250	4,250		By Balance b/d	45,000	40,000
To Goodwill A/c	5,000	5,000		By Bank A/c			50,000
To Stock A/c	12,000			By Carl’s Current A/c	2,500	2,500
To bal. c/d	28,125	35,125	50,000	By Carl’s Current A/c	1,875	1,875
	49,375	44,375	50,000		49,375	44,375	50,000

            Balance Sheet of Annie and Bonnie and Carl As at                                         1st April, 2017

Liabilities	Amount	Assets	Amount
Sundry Creditors	21,000	Cash at Ban	70,000
General Reserve	15,000	Sundry Debto22,000
Capital A/c		Less bad Debts (1,500)	20,500
Annie 28,125		Plant & Machinery	50,000
Bonnie35,125		Carl’s Current A/c	8,750
Carl  50,000	1,13,250
	1,49,250		1,49,250