Vikram and Pradnya share profits and loses in the ratio 2:3 respectively. Their balance sheet as on 31st March 2018 was as under.

1. Vikram and Pradnya share profits and loses in the ratio 2:3 respectively. Their balance sheet as on 31st March 2018 was as under.

Balance Sheet as on 31st March, 2018

Liabilities	Amount	Amount	Assest	Amount	Amount
Creditors		1,05,000	Cash		7,500
Capitals:			Land & Building		37,500
Vikram		75,000	Plant		45,000
Pradnya		75,000	Furniture		3,000
			Stock		75,000
			Debtors		87,000
		2,55,000			2,55,000

They agreed to admit Avani as a partner on 1stApril 2018 on the following terms:

1. Avani shall have 1/4th share in future profits.
2. He shall bring ₹37,50 as hi capital and ₹30,000 as his share of goodwill.
3. Land & Building to be valued at 45,000 an d Furniture to be depreciated by 10%
4. Provision for bad and doubtful debts is to be maintained at 5% on the sundry Debtors.
5. Stocks to be valued ₹82,50. 

The capital A/c of all partners to be adjusted in their new profit and loss ratio excess mount be transferred to their loan accounts.

Prepare Profit and Loss Account , Capital Accounts and new Balance Sheet. 

Solution:
In the Books of Vikram , Pradnya and Avani Partnership Firm

Revaluation Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Furniture	300	By Land & building	7,500
To R.D.D.	4,350	By Stock	7,500
To Profit	10,350
	15,000		15,000

Partner's Capital Account

Dr. Cr.

Particulars	Vikram	Pradnya	Avani	Particulars	Vikram	Pradnya	Avani
				By Balance b/d	75,000	75,000
				By Balance c/d			37,500
				By Goodwill	12,000	18,000
To Loan A/c	46,140	31,710		By Profit & Loss Adjustment A/c	4,140	6,210
To Balance c/d	45,000	67,500	37,500
	91,140	99,210	37,500		91,140	99,210	37,500

Balance Sheet as on 1.04.2018

Dr. Cr.

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital A/c:			Land & Building	37,500
Vikram	45,000		(+) Appreciation	7,500	45,000
Pradnya	67,500		Plant		45,000
Avani	37,500	1,50,000	Furniture	3,000
			(-) Depreciation	300	2,700
Creditors		1,05,000	Stock	75,000
Loan A/c:			(+) Appreciation	7,500	82,500
Vikram	46,140		Debtors	87,000
Pradnya	31,710	77,850	(-) R.D.D.	4,350	82,650
			Cash/Bank A/c		75,000
		3,32,850			3,32,850

Working Notes: 

Goodwill Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Vikram A/c	12,000	By Cash A/c	30,000
To Pradnya A/c	18.000
	30,000		30,000

Cash/Bank Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Balance b/d	7,500
To Avani	37,500
To Goodwill	30,000	By Balance c/d	75,000
	75,000		75,000

✱ Calculation of Ratio

	Vikram	Pradnya	Avani
Old Ratio	2/5	3/5
New Ratio	6/20	9/20	5/20
Sacrifice ration	2/5	3/5

✱ Remaining Share = 1- New Partner's Share (Avani)

=1-1/4

=3/4

✱ New Ratio = old ratio * Remaining Share

Vikram = 2/5 * 3/4 = 6/0

Pradnya = 3/5 * 3/4 = 9/20

✱sacrifice Ratio = old ratio - New ratio

Vikram =2/5 - 6/20 = 2/20

Pradnya = 3/5- 9/20 = 3/20

✱ Cash Bought by new Partner in cash 

Casg A/c  Dr.          37,500

     T Avani A/c         37,500

✱ Share of Goodwill by new Parner in cash

cash A/c     Dr       30,0000

      To Goodwill A/c      30,000

Goodwill A/c A/c   Dr.       30,000

    To Vikram                12,000

      To Pradnya A/c         18,0000

✱ Adjusted Capiatl 

Total Capital = New Partner Capital * Reciprocal of his Share

= 37,500 *4/1 = 1,50,000

Distributeion to all in New ratio

Vikarm = 1,50000 * 620 = 45,000

Pradnya =- 1,500,000 *9/20 = 67,500

Avani _=-1,50,000 * 5/20 = 37,5000