Aan and Shaan were partners sharing profits

78 :- Aan and Shaan were partners sharing profits in the ratio of 3:2. Their balance sheet as at 31^st March, 2024 was as under

They agreed to admit Mohan for 1/4th share on the above date subject to the following terms
(i) Mohan to bring in capital equal to 1/4th of the capital of Aan and Shaan after all Adjustments including premium for goodwill.
(ii) Building to be appreciated by 20% and stock to be depreciated to 70%
(iii) Provision for doubtful debts on debtors to be raised to Rs 10,000
(iv) A provision be made for Rs 18,000 for outstanding legal charges.
(v) Mohan’s share of goodwill premium was calculated as Rs 1,00,000
Prepare revaluation account, partners capital accounts and the balance sheet of the new firm.

Solution :-

WORKING NOTES :-
(a) Calculation of Mohan’s capital
Mohan’s capital = 1/4  x Total adjusted capital of Aan and Shaan
                          = 1/4 x (8,83,000 + 7,22,000)
                          = 1/4  x 16,05,000
                          = Rs 4,01,250