The following is the Balance Sheet of Om and Jay on 31st March 2018, they share profits and losses in the ratio 3:2

Balance Sheet as on 31st March 2018

Liabilities	Amount	Assets	Amount
Creditors	30,000	Cash	3,000
Capital A/c:		Building	15,000
Om	210,00	Machinery	21,000
Jay	21,000	Furniture	900
Current A/c:		Stock	12,300
Om	3,750	Debtors	27,000
Jay	3,450
	79,200		79,200

They take Jagdish into partnership on 1st April 2018 the terms being

1. Jagdish should pay 3,000 as his share of Goodwill. 50% of goodwill withdrawn by partners in cash.

2. He should bring 9,000 as capital for 1/4th share in future profits.

3. Building to be valued at 18,000, Machinery and Furniture to be reduced by 10% 

4. A Provision of 5% on debtors to be made for doubtful debts.

5. Stock is to be taken at the value of 15,000.

Prepare profit and loss A/c, Partner's current A/c Balance Sheet of the new firm.  

Solution:
In the Books of Om, Jay and Jagdish Partnership Firm.

Revaluation Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Machinery	2,100	By land & Building	3.000
To Furniture	90	By Stock	2,700
To R.D.D.	1,350
To Profit	2,160
	5,700		5,700

Partner's Current Account

Dr. Cr.

Particulars	Om	Jay	Particulars	Om	Jay
To Goodwill	900	600	By Balance	3,750	3,450
			By Goodwill	1,800	1,200
To Balance	5,946	4,914	BY Revaluation Profit	1,296	864
	6,846	5,514		6,846	5,514

Balance Sheet as on 1.04.2018

Cr. Dr.

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital A/c:			Land & Building	15,000
Om	21,000		(+) Appreciation	3,000	18,000
Jay	21,000		Machinery	21,000
Jagdish	9,000	51,000
Current A/c:			(-) Depreciation	2,100	18,900
Om	5,946		Furniture	900
Jay	4,914	10,860	(-) Depreciation	90	810
Creditors		30,000
			Stock	12,300
			(+) Appreciation	2,700	15,000
			Debtors	27,000
			(-) R.D.D.	1,350	25,650
			Cash in Hand		13,500
		91,860			91,860

Working Note:

Cash / Bank Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Balance	3,000	By Om Capital	900
To Jagdish Capital A/c	9,000	By Jay Capital	600
To Goodwill	3,000	By Balance	13,500
	15,000		15,000