| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| Creditors | 1,68,000 | Bank | 34,000 |
| General Reserve | 42,000 | Debtors | 46,000 |
| Capital’s A/c : | Stock | 2,20,000 | |
| L – 1,20,000 | Investments | 60,000 | |
| M – 80,000 | Furniture | 20,000 | |
| N – 40,000 | 2,40,000 | Machinery | 70,000 |
| 4,50,000 | 4,50,000 |
On the above date, O was admitted as a new partner and it was decided that:
(i) The new profit-sharing ratio between L, M, N and O will be 2 : 2 : 1 : 1.
(ii) Goodwill of the firm was valued at Rs. 1,80,000 and O brought his share of goodwill premium in cash.
(iii) The market value of investments was Rs. 36,000.
(iv) Machinery will be reduced to Rs. 58,000.
(v) A creditor of Rs. 6,000 was not likely to claim the amount and hence was to be written off.
(vi) O will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm.
SOLUTION
