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Suresh, Ramesh, Mahesh and Ganesh were partners in a firm sharing profits in the ratio of 2:2:3:3. On 1.4.2016 their Balance Sheet was as follows:
Suresh, Ramesh, Mahesh and Ganesh were partners in a firm sharing prof

From the above date the partners decided to share the future profits equally. For this purpose the goodwill of the firm was valued at ₹ 90,000.
It was also agreed that:
(i) Claim against Workmen Compensation Reserve will be estimated at ₹ 1,00,000 and fixed assets will be depreciated by 10%.
(ii) The capitals of the partners will be adjusted according to the new profit sharing ratio. For this, necessary cash will be brought or paid by the partners as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.

Answer
Suresh, Ramesh, Mahesh and Ganesh were partners in a firm sharing prof


Suresh, Ramesh, Mahesh and Ganesh were partners in a firm sharing prof
Suresh, Ramesh, Mahesh and Ganesh were partners in a firm sharing prof

Working Notes:
WN1: Calculation of Gaining Ratio/Sacrificing Ratio:
Old Ratio                                                    New Ratio
2 : 2 : 3 : 3                                                 1 : 1  :1  :1

Suresh space equals space 2 over 10 minus 1 fourth space equals space minus 1 over 20 space Gaining
Ramesh space equals space 2 over 10 minus 1 fourth space equals negative 1 over 20 space Gaining
Mahesh space equals space 3 over 10 minus 1 fourth space space equals space 1 over 20 Sacrificing
Ganesh space equals space 3 over 10 space minus space 1 fourth space equals space 1 over 20 space Sacrificing

Suresh, Ramesh will compensate Mahesh, Ganesh
Journal entries for Goodwill
Suresh, Ramesh, Mahesh and Ganesh were partners in a firm sharing prof

WN2: Calculation of Adjusted Capital
Suresh = 1,00,000 - 21,500 = ₹ 78,500
Ramesh = 1,50,000 - 21,500 = ₹ 1,28,500
Mahesh = 2,04,500 - 25,500 = ₹ 1,79,000
Ganesh = 2,54,500 - 25,500 = ₹ 2,29,000
Total Combined Capital = 6,15,000

WN3: Calculation of New capital
Suresh space equals space 6 comma 15 comma 000 space cross times space 1 fourth space equals space 1 comma 53 comma 750
Ramesh space equals space 6 comma 15 comma 000 space cross times space 1 fourth space equals space 1 comma 53 comma 750
Mahesh space equals space 6 comma 15 comma 000 space cross times space 1 fourth space equals space 1 comma 53 comma 750
Ganesh space equals space 6 comma 15 comma 000 space cross times space 1 fourth space equals space 1 comma 53 comma 750