Akash and Suraj are partners in a firm sharing profits and losses in the ratio 3:2. Their balance sheet as on 31st March, 2013 was as follows:

Balance Sheet as on 31st March, 2013

31st march, 2013

Liabilities	Amount (Rs.)	Assets	Amount (Rs.)
Capital A/c		Furniture	2,100
Akash	50,000	Stock	28,700
Suraj	50,000	Land and Building	35,000
General Reserve	10,000	Plant and Machinery	49000
Sundry Creditors	60,000	Sundry debtors	63,000
Bills Payable	17,000	Cash	9,200
	1,87,000		1,87,000

They agreed to admit Sanjay in their partnership on 1st April, 2013, on the following terms:

(1) Sanjay should bring Rs. 1,500, as his share of goodwill in the firm, and Rs. 2,000 as his capital.

(2) Reserve for doubtful debts is to be provided @ 5% on debtors.

(3) Land and building be depreciated at 10% p.a.

(4) Plant and Machinery to be depreciated @ 5% and stock to be depreciated @ 10% p.a.

(5) The new profit sharing ratio will be 2: 1: 1.

Prepare:

(a) Revaluation Account.

(b) Partners’ Capital Accounts.

(C)  New Balance Sheet of the firm.

Solution:

Revaluation Account

Particulars	Amount	Particulars	Amount
To Stock	2870
To Land and Building	3500
To Plant and Machinery	2450	To Loss of Revaluation A/c
To R.D.D.	3150	Akash’s Capital A/c	7182
		Suraj’s Capital A/c	4788
	11970		11970

Partners’ Capital Account

Particulars	Akash	Suraj	Sanjay	Particulars	Akash	Suraj	Sanjay
By Loss on Revaluation A/c	7182	4788	-	By Balance b/d	50000	50000
				By General Reserve (3:2)	6000	4000
				By Cash A/c			2000
				By Goodwill A/c	1167	333
To Balance c/d	49985	49545	2000
	57167	54333	2000		57167	54333	2000

New Balance Sheet as on 1 April, 2013

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital A/c			Furniture		2100
Akash	49985		Stock	28700
Suraj	49545		(-) Depreciation @ 10%	-2870	25830
Sanjay	2000	101530	Land and Building	35,000
Sundry Creditors		60000	(-) Depreciation @ 10%	-3500	31500
Bills Payable		17000	Plant and Machinery	49000
			(-) Depreciation @ 5%	-2450	46550
			Sundry debtors	63,000
			(-) R.D.D. @ 5%	-3150	59850
			Cash		12700
		178530			178530

W.N. 1.Cash Account

Particulars	Amount	Particulars	Amount
To Balance b/d	9200
To Sanjay’s Capital A/c	2000
To Goodwill A/c	1500	By Balance c/d	12700
	12700		12700

W.N. 2. Goodwill Account.

Particulars	Amount	Particulars	Amount
To Akash’ Capital A/c	1167	By Cash A/c	1500
To Suraj’s Capital	333
	1500		1500

W.N. 3. Calculation of Sacrifice Ratio

          S.R. = O.R. – N.R.

∴ Akash’s S.R. =

∴ Suraj’s S.R. =

∴ The Sacrifice Ratio of Old Partners is 2 : 7.