P and Q were partners in a firm sharing profits in 3:2 ratio. R was admitted as a new partner for 1/4th share in the profits on April 1, 2015. The Balance Sheet of the firm on March 31,2015 was as follows:

Balance Sheet of P and Q

as at March 31, 2015

LiabilitiesAmount (Rs.)AssetsAmount (Rs.)
Creditors20,000Cash20,000
General Reserve16,000Debtors18,000
Capitals: Stock20,000
     P     96,000 Furniture12,000
    Q    68,0001,64,000Machinery40,000
  Buildings90,000
Total2,00,000Total2,00,000

The term of agreement on R’s admission were as follows:

  1. a) R brought in cash 60,000 for his capital and 30,000 for his share of goodwill.
  2. b) Building was valued at 1,00,000 and Machinery at 36,000.
  3. c) The capital accounts of P and Q were to be adjusted in the new profit-sharing ratio. Necessary cash was to be brought in or paid off to them as the case may be.

Prepare Revaluation Account, Partner’s Capital Account and the Balance Sheet of P, Q and R.

Marks-8, CBSE:2016-17/Sample/Q-16*