Leena and Rohit are partners in a firm sharing profits in the ratio of 3 : 2. On 31st March, 2018, their Balance Sheet was as follows :
Balance Sheet of Leena and Rohit as at 31st March, 2018
Less: provision for Doubtful debts (2,000)
Plant and Machinery
On the above date Manoj was admitted as a new partner for 1/5th share in the profits of the firm on the following terms :
(i) Manoj brought proportionate capital. He also brought his share of goodwill premium of Rs. 80,000 in cash.
(ii) 10% of the general reserve was to be transferred to provision for doubtful debts.
(iii) Claim on account of workmen’s compensation amounted to Rs. 40,000.
(iv) Stock was overvalued by Rs. 16,000.
(v) Leena, Rohit and Manoj will share future profits in the ratio of 5 : 3 : 2.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.