R and S were partners in a firm sharing profits and losses in the ratio of 3: 2. Their Balance Sheet as at 31st March,2020 was as follows:
Balance Sheet of R and S as at 31st March, 2020
| Liabilities | Amount ₹ | Assets | Amount ₹ |
|---|---|---|---|
| Capitals: | Cash at Bank | 10,000 | |
| R 60,000 | Debtors 65,000 | ||
| S 40,000 | 1,00,000 | Less: Provision for Doubtful Debts 5,000 |
60,000 |
| General Reserve | 20,000 | Stock | 20,000 |
| Creditors | 20,000 | Machinery | 50,000 |
| Bills payable | 20,000 | Land and Building | 20,000 |
| 1,60,000 | 1,60,000 |
M was admitted on the above date as a new partner for 1/5th share in the profits of the firm. The terms of agreement were as follows:
- M will bring ₹80,000 as his capital and ₹60,000 as his share of goodwill premium.
- Machinery was revalued at ₹45,000
- Stock will be reduced by l0% and Land and Building will be appreciated by 40%.
Prepare Revaluation Account and Partners’ Capital Accounts.
Marks-8, CBSE:2020-21/Compartment/Q-21*
Answer :