Raka, Seema and Mahesh were partners sharing profits and losses in the ratio of 5:3:2. With effect from 1st April, 2019, they mutually agreed to share profits and losses in the ratio of 2:2:1.
On that date, there was a workmen’s compensation fund of Rs. 90,000 in the books of the firm. It was agreed that:
(i) Goodwill of the firm be valued at Rs. 70,000.
(ii) Claim for workmen’s compensation amounted to Rs. 40,000.
(iii) Profit on revaluation of assets and re-assessment of liabilities amounted to Rs. 40,000.
Pass necessary journal entries for the above transactions in the books of the firm.