A, B & C were partners in a firm sharing profits & losses in proportion to their fixed capitals. Their Balance Sheet as at March 31, 2017 was as follows:
|Amount (Rs.)||Assets||Amount (Rs.)|
|B 3,00,000||Debtors 15,000|
|C 2,00,000||10,00,000||Less: Provision for Doubtful Debts 1,500||13,500|
|General Reserve||75,000||A’s Loan||35,500|
|Creditors||23,000||Plant & Machinery||2,00,000|
|Outstanding Salary||7,000||Land & Building||6,00,000|
|B’s Loan||15,000||Profit & Loss Account (For the year ending 31st March 2017)||2,41,000|
On the date of above Balance Sheet, C retired from the firm on the following terms:
(i) Goodwill of the firm will be valued at two years purchase of the Average Profits of last three years. The Profits for the year ended March 31, 2015 & March 31, 2016 were Rs. 4,00,000&Rs. 3,00,000 respectively.
(ii) Provision for Bad Debts will be maintained at 5% of the Debtors.
(iii) Land & Building will be appreciated by Rs. 90,000 and Plant & Machinery Will be reduced to Rs. 1,80,000.
(iv) A agreed to repay his Loan.
(v) The loan repaid by A was to be utilized to pay C. The balance of the amount payable to C was transferred to his Loan Account bearing interest @ 12% per annum.
Prepare Revaluation Account, Partners’ Capital Accounts, Partners’ Current Accounts and the Balance Sheet of the reconstituted firm.