Raja and Rani are partners in a firm sharing profits and losses in the ratio of 3:2. Their balance sheet as
on 31.03.2020 was as follows.
Balance Sheet as on 31.03.2020
Liabilities ₹ Assets ₹
Creditors 40,000 Cash 5,000
Bills Payable 20,000 Machinery 60,000
General Reserve 25,000 Stock 25,000
Capitals: Debtors 23,000
Raja 60,000 Less: PDD 3,000 20,000
Rani 40,000 100,000 Buildings 50,000
Investments 20,000
P & L Account 5,000
185,000 185,000
On 01.04.2020 they admitted Mantri as a partner and offer him 1/5
th share in the future profits on the
following terms.
a. Mantri has to bring in Rs. 30,000 as his capital and ₹ 10,000 towards goodwill.
b. Goodwill is to be withdrawn by the old partners.(as per AS26)
c. Depreciate Machinery by 5%.
d. Appreciate buildings by 10%.
e. PDD is reduced to ₹ 2,000 and investments are to be revalued at ₹ 25,000.
Prepare: i. Revaluation Account
ii.Partners’ Capital Account.
iii. Balance sheet after admission.
