Yogesh and Naresh are partbners sharing profits in the ratio of 3 : 2. They admit Ramesh for 1/3rd share on 1st April, 2019 and also decide to share future profits equally. Balance Sheet of the firm as at 31st March, 2019 was as follows:

They admitted Ramesh on the following terms:
(a) He will bring RS.5,00,000 as his capital.
(b) His share of goodwill is valued RS.1,00,000 but he is unable to bring cash for his share of goodwill. It is agreed to debit the amount to his current Account.
(c) Value of Land and Building is to be apperciated by RS.40,000 each.
(d) Value of Furniture to be reduced to RS.40,000.
Provision for Debts to be increased to 10%.
(f) A liability for damages of RS.10,000 is to be created.
Pass the Journal entries on admission of Ramesh and prepare Revaluation Account.

Explanation

Gain on Revaluation-RS.49,000, Sacrificing Ratio-4 : 1.