Yogesh and Naresh are partners sharing profits in the ratio of 3 : 2. They admit Ramesh for 1/3rd share on 1st April, 2019 and also decide to share future profits equally. Balance Sheet of the firm as at 31st March, 2019 was as follows:

LiabilitiesAmount (Rs.)AssetsAmount (Rs.)
Capital A/c : Land4,00,000
Yogesh – 5,00,000Building4,00,000
Naresh – 5,00,00010,00,000Furniture50,000
Current A/c :Computers1,00,000
Yogesh – 1,10,000Stock1,50,000
Naresh – 90,0002,00,000Sundry Debtors – 2,10,000
Employees’ Provident Fund 25,000Less: Provision for Doubtful Debts – (10,000)2,00,000
Workmen Compensation Reserve 1,00,000Cash
Sundry Creditors 75,000Bank70,000
Expenses Payable 10,000Advertisement Suspense30,000
 14,10,000 14,10,000

They admitted Ramesh on the following terms:
(a) He will bring Rs. 5,00,000 as his capital.
(b) His share of goodwill is valued at Rs. 1,00,000 but he is unable to bring cash for his share of goodwill. It is agreed to debit the amount to his Current Account.
(c) Value of Land and Building is to be appreciated by Rs. 40,000 each.
(d) Value of Furniture to be reduced to Rs. 40,000.
(e) Provision for Doubtful Debts to be increased to 10%.
(f) A liability for damages of Rs. 10,000 is to be created.
Pass the Journal entries on admission of Ramesh and prepare Revaluation Account.


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