X and Y were partners in the profit-sharing ratio of 3: 2. Their balance sheet as at March 31, 2022 was as follows:
Balance Sheet as at March 31, 2022
|Creditors||56,000||Plant and Machinery||70,000|
|X 1,19,000||Debtors 42,000|
|Y 1,12,000||2,31,000||(-) Provision 7,000||35,000|
|Cash in hand||77,000|
Z was admitted for 1/6th share on the following terms:
- Z will bring ₹56,000 as his share of capital, but was not able to bring any amount to compensate the sacrificing partners.
- Goodwill of the firm is valued at ₹84,000.
- Plant and Machinery were found to be undervalued by ₹14,000 Building was to brought up to ₹1,09,000.
- All debtors are good.
- Capitals of X and Y will be adjusted on the basis of Z’s share and adjustments will be done by opening necessary current accounts.
You are required to prepare revaluation account and partners’ capital account.