Following is the Balance Sheet of Dhiraj and Niraj who shared profits and losses equally.

Following is the Balance Sheet of Dhiraj and Niraj who shared profits and losses equally.
Balance Sheet as on 31 March, 2013  

On 1 April, 2013 they agreed to admit Suraj on the following terms and conditions:

1) Suraj to bring for 1/3 share in future profit in cash Rs 90,000 towards his capital.

2) The firms goodwill should be raised to Rs 90,000 and it is to be written off after Suraj admission in new profit ratio.

3) Plant and Machinery was found undervalued by 10% and Land and Building was found overvalued by 20%.

4) Stock to be increased by Rs 2,200 and furniture to be reduced to Rs 10,000/-

5) Out of creditors Rs 1,200 is no more payable.

6) The Capital A/c to be adjusted in new profit sharing ratio by opening the current accounts.

Prepare Revaluation A/c, Capital A/c and New Balance Sheet.

Solution: