A, B and C were partners in a firm. Their Balance Sheet as at 31st March, 2019 was as follows:
Balance Sheet of A, B and C as at 31st March, 2019
B retired on 1st April, 2019. A and C decided to share profits in the ratio of 2 : 1. The following terms were agreed upon :
|Liabilities||Amount (Rs.)||Assets||Amount (Rs.)|
|Workmen Compensation Reserve||6,000||Debtors : 45,000|
|Capitals :||Less : Provision for doubtful debts 5,000||40,000|
|A 60,000||Land & Building||1,20,000|
- Goodwill of the firm was valued at 30,000.
- Bad-debts 4,000 were written off. The provision for doubtful debts was to be maintained @ 10% on debtors.
- Land and Building was to be increased to 1,32,000.
- Furniture was sold for 20,000 and the payment was received by cheque.
- Liability towards Workmen Compensation was estimated at 1,500.
- B was to be paid 20,000 through a cheque and the balance was transferred to his loan account.