Following is the Balance Sheet as at 31st March, 2019 of A and B, who share profits and losses in the ratio of 3 :2:

On 1st April, 2019, they admit C into partnership on the following terms:
(i) Provision for Doubtful Debts would be increased by RS.20,000.
(ii) Value of Land and Building would be increased to RS.1,80,000.
(iii) The value of Stock would be increased to RS.40,000.
(iv) The liability against the Workmen Compensation Reserve is determined at RS.20,000.
(v) C brought RS.1,00,000 in cash as his share of goodwill.
(vi) C would bring in furthre cash would make his capital equal to 20% of the total capital of the new firm after the above revaluation and adjustments are carried out.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the firm after C's admission.

Explanation

`{:("Computation of C's Capital:",RS.),("Capital of A after adjustments","3,40,000"),("Capital of B after adjustments",underline "2,60,000"),("Combined capital of A and B for 80% or 4//5th share",underline underline "6,00,000"):}`
`becuase` Total of new firm `RS.6,00 ,000xx5//4=RS.7,50,000`
C's share in capital `RS.7,50,000xx1//5=RS.1,50,000`.
Total cash brought in by C = Capital +share of goodwill
=RS.1,50,000+RS.1,00,000=RS.2,50,000.