Partners capital account/ What is Partner's Capital Account? / Adjustment of capital account - part4

In this video we will able to understand about partners capital account, that what is partners capital account, How to maintain partners capital account, what should be maintain in partner's capital account. Treatment of partner's capital account when there is change in profit sharing ratio among existing partners. Which entry should be transfer in partner's capital account. What is the adjustment of partners capital account, what are the steps of adjustment of partners capital account. A Capital Account is a general ledger account which shows some of the special transactions like proprietor’s investment in his own business,  the aggregate amount of earning, expenses of companies, etc.
There are many more transactions which affect the Capital. Like: Interest on Capital, Interest on Drawings, Salaries to the Partners, Commission for the Partners, etc.
These values are put in Profit and Loss Appropriation Account and at the same time credited or debited to their respective Capital Accounts.
Reconstitution of firm may also require the capitals of the partners in the reconstituted firm to be in accordance with their profit-sharing ratio.
This may require adjustment in capitals.
Calculate the adjusted old capital of partners.
Calculate total capital of new firm (if it is not given in question) as under.
Total Capital = Aggregate of adjusted old capitals of partners
Find out new capitals of partners by dividing the total capital in their new profit sharing ratio.
Find out the surplus/deficiency in each of the partner’s capital accounts by comparing the new capital with adjusted old capital.
At last, adjust the surplus by paying off or by transfer to the credit of his current a/c and adjust the deficiency by asking the concerned partner to bring in the required amount or by transfer to the debit of his current a/c.
The Balance sheet of Amit and Sumit who are sharing profit in the ration of 2 : 1, as on 1st Apr, 2020 is given below:-

Liabilities Rs. Assets Rs.
Capital A/cs: Land & Building 29,000
Amit 30,000 Furniture 8,000
Sumit 20,000 50,000 Stock 24,000
Reserve 15,000 Sundry Debtors 15,000
Sundry Creditor 25,000 Cash & Bank 3,000
90,000 90,000
On the above date, the partners changed their profit-sharing ratio to 3 : 2. Following was agreed:

The value of land and building will be Rs. 50,000;
Reserves to be maintained at Rs. 30,000 and
The total capital of the partners will be Rs. 60,000,
Which will be shared by the partners in their new profit-sharing ratio.
Prepare Partner’s Capital Accounts and the revised Balance Sheet.