L, M and N were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their Balance Sheet on 31st March, 2015 was as follows:

Liabilities   Amount
General Reserve42,000Debtors46,000
Capital’s A/c : Stock2,20,000
L – 1,20,000Investments     60,000
M – 80,000Furniture20,000
N – 40,0002,40,000 Machinery70,000
  4,50,000 4,50,000

On the above date, O was admitted as a new partner and it was decided that:
(i) The new profit-sharing ratio between L, M, N and O will be 2 : 2 : 1 : 1.
(ii) Goodwill of the firm was valued at Rs. 1,80,000 and O brought his share of goodwill premium in cash.
(iii) The market value of investments was Rs. 36,000.
(iv) Machinery will be reduced to Rs. 58,000.
(v) A creditor of Rs. 6,000 was not likely to claim the amount and hence was to be written off.
(vi) O will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm.


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