ZUUISTRATION 85.are partners in a firm sharing profits and losses in the ratio of 3:2:1Cheet as at 31st March, 2018 is as follows:their Balance SheeLiabilitiesSundry CreditorsRank OverdraftReseryeCapital AccountsAssets36,000 Cash20,000 Sundry Debtors15,000 Less : ProvisionStockPatentsFixed Assets1.70,000 Goodwill2,41,00050.00014,00050,0002,50047.50060,00060,00060,0006,00098,50015,0002,41,000On 1st April, 2018, D is admittedApril, 2018, D is admitted into the firm with 1/4th share in the profits,ts 1/8th from 4 and 1/8th from B. Other terms of agreement are as under:which he gets 1/8th from(a) D will introduce 60,000 aswill introduce 860,000 as his capital and pay 218,000 as his share ofgoodwill.20% of the reserve is to remain as a provision against bad and doubtful debts.A liability to the extent of 1,000 be created in respect of a claim for damagesagainst the firm.An item of 4,000 included in sundry creditors is not likely to be claimed.le) Stock is to be reduced by 30% and patents to be written off in full.A is to pay off the Bank Overdraft.After making the above adjustments the capital accounts of the old partners beadiusted on the basis of D's capital to his share in the business, ie, actual cash to bepaid off to, or brought in by, the old partners, as the case may be.Prepare journal entries, Capital Accounts and the Balance Sheet of the new firm.​