This is a full admission problem: work out the new and sacrificing ratios first, then revaluation, then reserve distribution, then goodwill, then the closing capitals, and finally redraft the balance sheet with the revalued figures.

Step 1 — New Ratio and Sacrificing Ratio

U is given 1/4th share directly; remaining 3/4th shared by S and T in old ratio 3:2.

S's new share = 3/5 × 3/4 = 9/20; T's new share = 2/5 × 3/4 = 6/20; U's share = 1/4 = 5/20

New Ratio S : T : U = 9 : 6 : 5

S's sacrifice = 3/5 − 9/20 = 12/20 − 9/20 = 3/20; T's sacrifice = 2/5 − 6/20 = 8/20 − 6/20 = 2/20

Sacrificing Ratio S : T = 3 : 2

Step 2 — Revaluation Account

Profit on Revaluation = ₹15,000 − ₹7,000 = ₹8,000, shared 3:2 → S ₹4,800, T ₹3,200.

Step 3 — Distribution of General Reserve

General Reserve ₹25,000, shared 3:2 → S's share = ₹15,000; T's share = ₹10,000.

Step 4 — Premium for Goodwill

U brings ₹20,000 premium for goodwill in cash, shared in sacrificing ratio 3:2 → S's share = ₹12,000; T's share = ₹8,000.

Step 5 — Partners' Capital Accounts

S's closing capital = 1,00,000 + 15,000 + 4,800 + 12,000 = ₹1,31,800

T's closing capital = 80,000 + 10,000 + 3,200 + 8,000 = ₹1,01,200

U's closing capital = ₹90,000 (capital only)

Step 6 — Bank Account (for reference) …

As a quick cross-check before drawing the final balance sheet, verify that total assets recomputed independently (1,35,000 + 18,000 + 36,000 + 47,000 + 1,42,000 = 3,78,000) equal total liabilities and capitals recomputed independently (1,31,800 + 1,01,200 + 90,000 + 45,000 + 10,000 = 3,78,000) …

The most common mistake in a comprehensive problem like this is forgetting to update EVERY affected asset/liability figure in the final balance sheet (e.g., showing Stock at its old ₹40,000 instead of the revalued ₹36,000), or forgetting to remove the General Reserve line entirely from the new balance sheet since it has already been fully distributed to S and T. Always cross-check that the new balance sheet …