Raghu and Rishu are partners sharing profits in the ratio 3 2 Their Balance Sheet as at 31st March 2......

Raghu and Rishu are partners sharing profits in the ratio 3 : 2. Their Balance Sheet as at 31st March, 2009 was as follows:

BALANCE SHEET OF RAGHU AND RISHU

as at 31st March, 2009

Rishabh was admitted on that date for 1/4th share of profit on the following terms:

1. Rishabh will bring 50,000 as his share of capital.
2. Goodwill of the firm is valued at 42,000 and Rishabh will bring his share of goodwill in cash. (c) Buildings were appreciated by 20%.

1. All Debtors were good.
2. There was a liability of 10,800 included in Creditors which was not likely to arise.
3. New profit-sharing ratio will be 2 : 1 : 1.
4. Capital of Raghu and Rishu will be adjusted on the basis of Rishabh's share of capital and any excess or deficiency will be made by withdrawing or bringing in cash by the concerned partners as the case may be.

Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.

By: NIHARIKA WALIA