A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following is their Balance Sheet as at 31st March, 2019:

C is admitted as a partner on 1st April, 2019 on the following terms:
(a) C is to pay RS.20,000 as capital for 1/4th share. He also pays RS.5,000 as premium of goodwill.
(b) Debtors amounted to RS.3,000 is to be written off as bad and a Provision of 10% is created against Doubtful Debts on the remaining amount.
(c) No entry has been passed in respect of a debt RS.300 recovered by A from a customer which was previously written off as bad in previous year. The amount is to be paid by A.
(d) Investments are taken over by B at their market value RS.4,900 against cash payment.
You are required to prepare Revaluation Account, Partners' Capital Accounts, and new Balance Sheet.

Answer

Loss on Revaluation-RS.4,000; Partners' Capital A/cs: A-RS.50,300; B-RS.30,400; C-RS.20,000; Balance Sheet Total-RS.1,20,700.

Explanation

Provision for Doubtful Debts= 10/100 (RS.15,000-RS.3,000 (Bad Debts)).