Mr. Deep & Mr. Karan were in Partnership sharing Profits & losses in the proportion of 3:1 respectively. Their Balance Sheet on 31st March 2018 Stood as follows.

4. Mr. Deep & Mr. Karan were in Partnership sharing Profits & losses in the proportion of 3:1 respectively. Their Balance Sheet on 31st March 2018 Stood as follows.

Balance Sheet as on 31st March, 2018

Liabilities	Amount	Amount	Assets	Amount	Amount
Sundry Creditors		40,000	Cash		40,000
Bill payable		10,000	Sundry debtors		32,000
Bank Overdraft		11,000	Land & Building		16,000
Capital A/c:			Stock		20,000
Deep	60,000		Plant & Machinery		30,000
Karan	20,000	80,000	Furniture		11,000
General Reserve		8,000
		1,49,000			1,49,000

They admit Shubham into Partnership on 1st April, 2018 The term being that:

1. He shall have to bring in ₹20,000 as his capital for 1/5 Share in future profits & 10,000as his share of Goodwill

2. A Provision for 5% doubtful debts to be created on sundry debtors

3. Furniture to be depreciated by 20% 

4. Stock should be appreciated b 5% and building be appreciated by 20%

5. capital a/c of all partners be adjusted in their new profit sharing ratio through cash account.

Prepare Profit and loss adjustment A/c, Partner's Capital A/c, Balance Sheet of new firm.

Solution:  

Revaluation Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To R.D.D.	1,600	By Stock	1,000
To Furniture	2,200	By Land & Building	3,200
To Profit	400
	4,200		4,200

Partner's Capital Account

Dr. Cr.

Particulars	Deep	Karan	Shubham	Particulars	Deep	Karan	Shubham
				By Balance	60,000	20,000
				By General Reserve	6,000	2,000
To Cash A/c	13,800	4,600		By Balance			20,000
				By Goodwill	7,500	2,500
TO Balance	60,000	20,000	20,000	By Revaluation Profit	300	100
	73,800	24,600	20,000		73,800	24,600	20,000

Balance Sheet as on 01.04.2019

Cr. Dr.

Liabilities	amount	Amount	Assets	Amount	Amount
Capital A/c:			Debtors	32,000
Deep	60,000		(-) R.D.D.	1,600	30,400
Karan	20,000		Land & Building	16,000
Shubham	20,000	1,00,000	(+) Appreciation	3,200	19,200
			Stock	20,000
			(+) Revalued	1000	21,000
			Plan & Machinery		30,000
			Furniture	11,000
Creditors		40,000	(-) depreciation	2,200	8,800
Bill Payable		10,000	Cash/Bank A/c		88,400
Bank Overdraft		11,000
		1,61,000			1,61,000

Goodwill Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Deep	7,500	By cash A/c	10,000
To Karan	2,500
	10,000		10,000

Cash Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Balance	40,000
To Shubham Capital A/c	20,000
To Goodwill	10,000
To Deep	13,800	By Balance	88,400
To karan	4,800
	88,400		88,400