A and B are partners in a firm. Their balance sheet as at 31 st March, 2022 was

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A and B are partners in a firm. Their balance sheet as at 31 st March, 2022 was as follows :
Liabilities
Provision for Doubtful Debts 4,000 Cash 10,000
Workmen Compensation Reserve 5,600 Sundry Debtors 80,000
Outstanding Expenses 3,000 Stock 20,000
Creditors 30,000 Fixed Assets 38,600
Capitals: A 50,000 Profit & Loss A/c 4,000
B 60,000
1,52,600
₹
C was taken into partnership as from 1st April, 2022. C brought ₹40,000 as his capital but he is
unable to bring any amount for goodwill. New profit sharing ratio is 3:2:1. Following terms were
agreed upon :
1,52,600
1. Claim on account of Workmen’s Compensation is ₹3,000.
2. To write off Bad Debts amounting to ₹6,000.
3. Creditors are to be paid ₹2,000 more.
4. ₹2,000 be provided for an unforeseen liability.
5. Outstanding expenses be brought down to ₹ 1,200.
6. Goodwill is valued at year’s purchase of the average profits of last three
years. Profits of 3 years amounted to ₹8,000; ₹ 10,000 and ₹ 18,000. Prepare Journal entries, capital accounts and opening Balance Sheet.

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