Mr. Kishor & Mr. Lal were in partnership sharing profits & losses in the proportion of 3/4 and 1/4 respectively.

5. Mr. Kishor & Mr. Lal were in partnership sharing profits & losses in the proportion of 3/4 and 1/4 respectively. 

Balance Sheet as on 31 March 2018

Liabilities	Amount	Amount	Assets	Amount	Amount
Sundry creditors		1,20,000	Land & Building		75,000
General reserve		12,000	Furniture		6,000
Capital A/c:			Stock		60,000
Kishor	90,000		Debtors		60,000
Lal	48,000	1,38,000	Bills Receivable		39,000
			Cash at Bank		30,000
		1,49,000			1,49,000

They decided to admit Ram on 1st April 2018 on following terms:

1. He Should be given 1/5th share in profit and for that he brought in 460,000 as capital through RTGS.

2. Goodwill should be raised at 460,000.

3. Appreciate Land & building by 20%

4. Furniture and Stock are to be depreciated by 10%

5. The capitals of all partners should be adjusted in their new profit sharing ration through Bank A/c.

Pass necessary Journal Entries in the books of the partnershi firm and a Balance sheet of new firm.

Solution:

In the Books of Mr. Kishor, Mr. Laland Mr. Ram Partnership Firm

Date	Particulars	L/F	Debit ₹	Credit ₹
1.	General reserve A/c Dr.  To Kishor A/c    To Lal A/c  [Being undistributed profit distributed among the Partner]		20,000	20,000
2.	bank A/c Dr.  To ram Capital A/c  [Being capital bought by new partner in cash]		60,000	60,000
3.	Goodwill A/c Dr.  To Kishor A/c  To Lal A/c  [being goodwill raised]		60,000	45,000  15,000
4.	Revaluation A/c Dr.  To Furniture A/c  To Stock A/c  [Being Assets are revalued]		6,600	600  6,000
5.	Land & Building A/c Dr.  To Revaluation A/c  [Being Assets are revalued]		15,000	15,000
6.	Revaluation A/c Dr.  To Kishor  To Lal   [Being		8,400	6,300  2,000
7.	Bank A/c Dr.  To Kishor Capital A/c  [Being deficit in capital A/c settled in cash by Kishor]		29,700	29,700
8.	Lal Capital A/c Dr.  To Bank A/c  [Being surplus of Mr. Lal capital A/c]		8,100	8,100

Balance Sheet as on 1.04.2018

Cr. Dr.

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital A/c:			Land & Building	75,000
Mr. Kishor	1,80,000		(+) Appreciation	15,000	90,000
Mr. Lal	60,000		Furniture	6,000
Mr. Ram	60,000	3,00,000	(-) Depreciation	600	5,400
			Stock	60,000
Creditors		1,20,000	(-) Depreciation	6,000	54,000
			Debtors		60,000
			Bills receivable		39,000
			Cash at bank		1,11,600
		4,20,000			4,20,000

✱Total capital = Capital of New Partner * Reciprocal of his Share

= 60,000 * 5/1 = 3.00,000

Distribution of capital

Kishor = 3,00,000 * 3/5 = 1,80,000

Lal = 3,00,000 * 1/5 = 60,000

Ram = 3,00,000 * 1/5 = 60,000