Ahmed and Wahid are partners sharing profits and losses in the ratio of 3:1. Their Balance sheet as on March 31, 2021 is as follows. Liabilities Amount (RO) Assets Amount (RO) Creditors 315000 Cash 26250 Bills Payable 105000 Debtors 367500 General Reserve 210000 Stock 157500 Capital: Plant 131250 Ahmed 420000 | Buildings 525000 Wahid 210000 Profit & Loss Ac 52500 Bank Overdraft 315000 | Equipment 315000 Total 1575000 Total 1575000 On April 01, 2021, they agreed to admit Khalid into the firm for 1/5th Share of future profits on the following terms: a) Building is revalued at 630000 b) Stock is revalued at 112875 c) Goodwill is raised at 210000 d) Provision for bad debts is to be made at 5% e) Khalid has to bring in a Capital 262500 f) Khalid was unable to bring the amount of goodwill

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Ahmed and Wahid are partners sharing profits and losses in the ratio of 3:1. Their Balance sheet as
on March 31, 2021 is as follows.
Liabilities
Amount (RO)
Assets
Amount (RO)
Creditors
315000
Cash
26250
Bills Payable
105000
Debtors
367500
General Reserve
210000
Stock
157500
Сapital:
Plant
131250
Ahmed
420000
Buildings
525000
Wahid
210000
Profit & Loss Ac
52500
Bank Overdraft
315000 | Equipment
315000
Total
1575000
Total
1575000
On April 01, 2021, they agreed to admit Khalid into the firm for 1/5th Share of future profits on
the following terms:
a) Building is revalued at
630000
b) Stock is revalued at
112875
c) Goodwill is raised at
210000
d) Provision for bad debts is to be made at 5%
e) Khalid has to bring in a Capital
262500
f) Khalid was unable to bring the amount of goodwill
Pass Journal Entries and Prepare Revaluation Account, Capital Accounts and the Balance Sheet of the
reconstituted firm.
Transcribed Image Text:Ahmed and Wahid are partners sharing profits and losses in the ratio of 3:1. Their Balance sheet as on March 31, 2021 is as follows. Liabilities Amount (RO) Assets Amount (RO) Creditors 315000 Cash 26250 Bills Payable 105000 Debtors 367500 General Reserve 210000 Stock 157500 Сapital: Plant 131250 Ahmed 420000 Buildings 525000 Wahid 210000 Profit & Loss Ac 52500 Bank Overdraft 315000 | Equipment 315000 Total 1575000 Total 1575000 On April 01, 2021, they agreed to admit Khalid into the firm for 1/5th Share of future profits on the following terms: a) Building is revalued at 630000 b) Stock is revalued at 112875 c) Goodwill is raised at 210000 d) Provision for bad debts is to be made at 5% e) Khalid has to bring in a Capital 262500 f) Khalid was unable to bring the amount of goodwill Pass Journal Entries and Prepare Revaluation Account, Capital Accounts and the Balance Sheet of the reconstituted firm.
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