Nandkishor and Nandlal are in partnership sharing profits and losses in the proportion of ¾ and ¼ respectively. Their Balance Sheet as on 31st March, 2014 was as under.

Balance Sheet as on 31st March, 2014

Liabilities	Rs.	Assets	Rs.
Nandkishor Capital	30000	Land and Building	25000
Nandlal Capital	16000	Furniture	2000
General Reserve	4000	Stock	20000
Sundry Creditors	40000	Sundry Debtors	20000
		Bills Receivable	13000
		Bank Balance	10000
	90000		90000

On 1st April, 2014, they decided to admit Nandram on the following terms.

1. He should be given 1/5^th share in profit and for that he should bring in Rs. 20,000 as capital.

2. Goodwill should be raised at Rs. 20,000.

3. Depreciate Furniture and stock by 10% and Create 5% R.D.d. on Debtors

4. Appreciate Land and Building by 20%.

5. The Capitals of all partners should be adjusted in their profit sharing proportion.

Pass the necessary journal entries in the books of the partnership firm and prepare a Balance Sheet of the new firm. 

Ans.
Profit and loss adjustment a/c	Profit: 1800
Balance sheet total	140000
Bank Balance	38200
Capital A/c
Nandkishor	60000
Nandlal	20000
Nandram	20000
New Profit Sharing Ratio	3:1:1