The Balance Sheet of Sahil and Nikhil who Share Profit in the ratio of 3:2 as on 31st March 2017.

Balance Sheet as on 31st March 2017

Liabilities	Amount	Amount	Assets	Amount	Amount
Creditors		60,000	Furniture		60,000
Capitals:			Building		72,000
Sahil	80,000		Debtors		40,000
Nikhil	1,00,000	1,80,000	Closing Stock		48,000
			Cash in Hand		20,000
		2,40,000			2,40,000

Varad admitted on 1st April 2017 on the following terms:

1. Varad was to pay 1,00,000 for this share of capital.

2. He was also to pay40,000 as his share of Goodwill.

3. The new profit sharing ratio was 3:2:3

4. Old partners decided to revalue the assets as follows:

Building 1,00,000, Furniture 48,000, Debtors 38,000 (in view of likely bad debts)

5. It was found that there was a liability for 3,000 for goods in march 2017 but recorded on 2nd April 2017.

You are required to prepare:

a) Profit and Loss adjustment accounts

b) Capital accounts of the partners

c)Balance Sheet after the admission of Varad.

Solution:
In he Books of Sahil, Nikhil and Varad Partnership Firm.

Revaluation Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Furniture	12,000	By Building	28,000
To R.D.D.	2,000
To Unrecorded	3,000
To Profit	11,000
	28,000		28,000

Partner's Capital Account

Dr. Cr.

Particulars	Sahil	Nikhil	Varad	Particulars	Sahil	Nikhil	Varad
				By Balance	80,000	1,00,000
				By Balance			1,00,000
To Balance	1,10,600	1,20,400	1,00,000	By Goodwill	24,000	16,000
				By Revaluation Profit	6,600	4,400
	1,10,600	1,20,400	1,00,000		1,10,600	1,20,400	1,00,000

Balance Sheet as on 1st April 2017

Cr. Dr.

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital A/c:			Furniture	60,000
Sahil	1,10,600		(-) Depreciation	12,000	48,000
Nikhil	1,20,400		Building	72,000
Varad	1,00,000	3,31,000	(+) Appreciation	28,000	1,00,000
Creditors		60,000	Debtors	40,000
Unrecorded		3,000	(-) R.D.D.	2,000	38,000
			Closing Stock		48,000
			Cash in Hand		1,60,000
		3,94,000			3,94,000

Working Note:

Cash/Bank Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Balance	20,000
To Varad Capital	1,00,000
To Goodwill	40,000	By Balance	1,60,000
	1,60,000		1,60,000