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.) | |
| Capitals: | Bank | 21,000 | |
| A 5,00,000 | Stock | 9,000 | |
| 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 |
| Total | 11,20,000 | Total | 11,20,000 |
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.
Marks-8, CBSE:2017-18/Sample/Q-17*
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