Arrange the following steps in correct order for calculation of Proportionate Capital of New Partner.

(A) Balancing the capital account of old partners
(B) Calculation of Gain/Loss on Revaluation and transferring to Capital Account
(C) Transferring Accumulated Profit to Capital account
(D) Calculation of Proportionate Capital for New Partner
(E) Adjustment for Goodwill in Partner's capital account

Choose the correct answer from the options given below:

(B), (E), (C), (A), (D)

The correct answer is Option (3) - (B), (E), (C), (A), (D).

Calculation of Gain/Loss on Revaluation and transferring to Capital Account (Step B): Before admitting a new partner, the existing assets and liabilities of the partnership firm are revalued to reflect their current market values. The revaluation is done to ensure that the new partner enters the partnership with accurate and up-to-date values of the assets and liabilities.

Adjustment for Goodwill in Partner's capital account (Step E ): Goodwill represents the value of the reputation and customer base of the firm. When a new partner is admitted, the existing goodwill of the firm may need to be adjusted to account for the new partner's contribution to the firm. If the new partner brings in additional value, goodwill may increase, and if the new partner's entry decreases the overall value, goodwill may decrease.

Transferring Accumulated Profit to Capital account (Step C): Accumulated reserves, such as general reserves or specific reserves, may exist in the books of the partnership. These reserves need to be transferred or adjusted when a new partner is admitted to ensure that the new partner's capital is appropriately accounted for.

Balancing the capital account of old partners (Step A): The admission of a new partner can affect the capital accounts of the existing partners. The capital accounts of the old partners need to be adjusted to reflect the changes in the firm's value due to the admission of the new partner.

Calculation of proportionate capital of new partner (Step D): Once all adjustments are made, the capital of the new partner is calculated based on the agreed-upon profit-sharing ratio or investment ratio. This ensures that the new partner's capital is appropriately determined and recorded in the books of accounts.