A and B are partners sharing profits and losses in the ratio 3 : 2. They decided to admit C as a new partner on 1st April, 2021 from the effective date. On 1st April, 2021 the Balance Sheet and terms of entries of A and B are as follows:
\[
\begin{array}{|c|c|}
\hline
Capital and Liabilities &
Amount (Rs.)
\hline
\text{Capital A/c:} & 6,00,000
A & 3,00,000
B & 3,00,000
\text{Creditors} & 60,000
\text{Outstanding Expenses} & 15,000
\hline
\text{Total Capital and Liabilities} & 6,75,000
\hline
\end{array}
\begin{array}{|c|c|}
\hline
Assets &
Amount (Rs.)
\hline
\text{Plant} & 4,53,000
\text{Furniture} & 62,000
\text{Stock} & 84,000
\text{Debtors} & 36,000
\text{Cash} & 40,000
\hline
\text{Total Assets} & 6,75,000
\hline
\end{array}
\]
The following are conditions of entries:
The profit in future will be distributed equally.
The capital of the firm was determined to be Rs. 6,00,000, which will be given in the profit ratio by the partners.
C will give the share of capital and goodwill in cash.
The valuation of goodwill will be done on the basis of over-value of two years’ purchases. The average net profit of the firm is Rs. 90,000 per year. The nominal profit on capital is 10% in nominal business.