Atul and Amit are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2019 is as follows:
Abhay is admitted as a partner for 1/4th share on 1st April, 2019 on the following terms:
(a) Abhay is to bring RS.65,000 as capital after adjusting amount due to him included in creditors and his share of Goodwill.
(b) RS.10,000 included in creditors is payable to Abhay which is to be transferred to his Capital Account.
(c) Furniture is to reduced by RS.3,000 and Plant and Machinery is to be increased to RS.1,98,000. (d)
Stock is overvalued by RS.4,000.
(e) A Provision for Doubtful Debts is to be created @ 5%.
(f) Goodwill is to be valued at 2 years' purchase of average profit for four years. Profits of four years ended 31st March were as follows: 2018-19-RS.25,000,2017-18-RS.10,000,2016-17-RS.2,500, and 2015-16-RS.2,500.
Pass the Journal entries for the above arrangement.