Vimal and Nirmal are partners in a firm sharing profits and losses in the ratio of 5 : 3. They admit Kailash into the firm on 1st April 2023, when their Balance Sheet was as follows:
| Liabilities | ₹ | Assets | ₹ |
| Vimal’s Capital Nirmal’s Capital General Reserve Bank Loan Creditors |
32,000 34,000 8,000 6,000 6,000 |
Goodwill Machinery Furniture Debtors Stock Cash |
8,000 38,000 5,000 23,000 7,000 5,000 |
| 86,000 | 86,000 |
Term’s of Kailash’s admission were as follows:
- Kailash will bring ₹ 30,000 as his share of capital and will be entitled to 1/3rd share in the profits.
- Kailash is not to bring goodwill in cash, Vimal and Nirmal raise the goodwill in the books.
- Goodwill of the firm is valued on the basis of 2 year’s purchase of the average profit of the last three years. Average profit of the last three years is ₹ 6,000.
- Machinery and stock are revalued at ₹ 45,000 and ₹ 8,000 respectively.
Prepare a Revaluation Account and Partner’s Capital Accounts incorporating the above adjustments.
Solution :
