Mr. Amit and Baban share profits and losses in the 2:3 respectively. Their balance sheet as on 31st march 2018 was as under.

Balance Sheet as on 31st March 2018

Liabilities	Amount	Assets	Amount
Creditors	1,40,000	Cash	1,10,000
Capital:		Land & Building	50,000
Amit	1,00,000	Plant	60,000
Baban	1,00,000	Furniture	4,000
		Stock	1,00,000
		Debtors	16,000
	3,40,000		3,40,000

They agreed decided to admit Kamal on 1st April 2018 on following terms:

1. Kamal shall have 1/4th share in future profits.

2. They agreed to admit Kamal as a partner on 1st April 2018 on the following terms.

3. She shall bring 50,000 as her capital and 40,000 as her share of goodwill.

4. Land & Building to be valued at 60,000 and Furniture to be depreciated by 10% 

5. Provision for bad and doubtful debts is to be maintained at 5% on the sundry debtors

6. Stocks o be valued 1,10,000

The Capital A/c of all partners to be adjusted in their new profit and loss ratio and excess amount be transferred to their loan account.

Prepare profit and loss adjustment A/c, Capital A/c, New Balance Sheet 

Solution:
In the Books of Amit, Baban and Kamal Partnership Firm.

Revaluation Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Furniture	400	By Building	10,000
To R.D.D.	800	By Sock	10,000
To Profit	18,800
	20,000		20,000

Partner's Capital Account

Dr. Cr.

Particulars	Amit	Baban	Kamal	Particulars	Amit	Baban	Kamal
				By Balance	1,00,000	1,00,000
To Loan	63,520	45,280		By Balance			50,000
				By Goodwill	16,000	24,000
To Balance c/d	60,000	90,000	50,000	By Revaluation Profit	7,520	11,280
					1,23,520	1,35,280	50,000

Balance Sheet as on 1.04.2018

Cr. Dr.

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital A/c:			Land & Building	50,000
Amit	60,000		(+) Appreciation	10,000	60,000
Baban	90,000		Plant		60,000
Kamal	50,000	2,00,000	Furniture	4,000
Loan A/c:			(-) Depreciation	400	3,600
Amit	63,520		Stock	1,00,000
Baban	45,280	1,08,000	(+) Appreciation	10,000	1,10,000
Creditors		1.40.000	Debtors	16,000
			(-) R.D.D.	800	15,200
			Cash		2,00,000
		4,48,000			4,48,000

Working Note:

Cash / bank Account

Dr. Cr.

Particulars	Amount	Particulars	Amount
To Balance	1,10,000
To Kamal Capital	50,000
To Goodwill	40,000
		By Balance	2,00,000
	2,00,000		2,00,000

✱ Calculation of Ratio

Remaining share = 1 - Share of new partner

= 1 - 1/4

= 3/4

New ratio = old ratio * remaining share

Amit = 2/5 * 3/4 = 6/20

Baban = 3/5 * 3/4 = 9/20

Total Capital = New partner Capital * reciprocal of his share

= 50,000 * 4/1

=2,00,000

Distribution of capital 

Amit = 2,00,000 * 6/20 =  60,000

Baban = 2,00,000 * 9/20 = 90,000

Kamal = 2,00,000 * 5/20 = 50,000