Question

M/s. Mahima LLC a partnership firm starts the business with total capital of OMR 156,000. The assets and liabilities of the firm listed in the table below.

Name of Account	OMR	Name of Account	OMR
Cash	54,000	Bank Loan	48,000
Sundry Debtors	84,000	Bonds	60,000
Stock	30,000	Bills Payable	96,000
Machinery	48,000	Sundry Creditors	120,000
Land	84,000	Bank Overdraft	30,000
Furniture	30,000	General Reserve	60,000
Premises	48,000	Profit & Loss A/C	30,000
Building	120,000	A’s Capital Account	72,000
Plant	72,000	B’s Capital Account	48,000
Bill Receivable	30,000	C’s Capital Account	36,000

The firm decided to admit D into the partnership for 1/5^th of the future profits with the terms that D shall bring in a capital of OMR 60,000 and the Goodwill of the firm being valued at OMR 48,000 on 1.4.2020. The assets like Machinery, Land, Buildings and Plant are to be appreciated by 10% and Stock, Furniture, Premises are to be depreciated by 5%.

Provision for Doubtful Debts to be made on Sundry debtors @ 5%, Discount on Creditors to be created against Sundry Creditors @ 2.5%, Provision for outstanding liability is also to be created at OMR 4,800 and Bank Loan is to be maintained.

A, B and C sharing profits 3:2:1 as on 31.3.2020.

Prepare Partners’ Capital Accounts and Balance Sheet of the reconstituted partnership firm.

Give your views about the changes in the balance sheet after reconstitution.   

Answer 1