Bittu and Chintu were partners in a firm sharing profits and losses in the ratio of 4 : 3. Their Balance Sheet as at 31st March, 2024 was as follows:
Balance Sheet of Bittu and Chintu as at 31st March, 2024
Liabilities | Amount (₹) | Assets | Amount (₹) |
Capitals: | | Fixed Assets | 15,40,000 |
Bittu | 8,00,000 | Stock | 3,50,000 |
Chintu | 6,00,000 | Debtors | 1,40,000 |
General Reserve | 2,10,000 | Bank | 70,000 |
Creditors | 4,90,000 | | |
Total | 21,00,000 | Total | 21,00,000 |
On 1st April, 2024, Diya was admitted in the firm for 1⁄7 share in the profits on the following terms:
- New profit sharing ratio between Bittu, Chintu, and Diya will be 3 : 3 : 1.
- Fixed Assets were found to be overvalued by ₹ 1,40,000.
- Creditors were paid ₹ 4,20,000 in full settlement.
- Diya brought proportionate capital and ₹ 5,60,000 as her share of goodwill premium by cheque.
Prepare Revaluation Account and Partners’ Capital Accounts.