X and Y share profits in the ratio of 5 : 3. Their balance sheet as at 31st March, 2024 was as follows:

X and Y share profits in the ratio of 5 : 3. Their balance sheet as at 31st March, 2024 was as follows:

Balance Sheet as at 31st March

Liabilities	₹	Assets	₹
Creditors	15,000	Cash at Bank	5,000
Provident Fund	10,000	Sundry Debtors 20,000 Less: Provision 600	19,400
Workmen’s Compensation Reserve	5,800	Stock	25,000
Capitals: X Y	70,000 31,000	Fixed Assets	80,000
		Profit & Loss A/c	2,400
	1,31,800		1,31,800

They admit Z into partnership on 1st April, 2024 with 1/8th share in profits. Z brings ₹ 20,000 as his capital and ₹ 12,000 for goodwill in cash. Z acquires his share entirely from X. Following revaluations are also made:

1. Provident fund is to be increased by ₹ 5,000.
2. Debtors are all good. Therefore, no provision is required on debtors.
3. Stock includes ₹ 3,000 for obsolete items.
4. Creditors are to be paid ₹ 1,000 more.
5. Fixed Assets are to be revalued at ₹ 70,000.

Prepare Journal entries, necessary accounts and new balance sheet Also calculate the new profit sharing raio. [Ans. Loss on Revaluation ₹ 18,400; Capitals X ₹ 72,625; Y ₹ 25,375; Z ₹ 20,000; B/s total ₹ 1,49,000. New Ratio 4 : 3 : 1.]