|Capital’s A/c :||Stock||2,20,000|
|L – 1,20,000||Investments||60,000|
|M – 80,000||Furniture||20,000|
|N – 40,000||2,40,000||Machinery||70,000|
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.