Akul, Bakul and Chandan were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2018 their Balance Sheet was as follows :
Bakul retired on the above date and it was agreed that :
(i) Plant and Machinery was undervalued by 10%.
(ii) Provision for doubtful debts was to be increased to 15% on debtors.
(iii) Furniture was to be decreased to Rs. 87,000.
(iv) Goodwill of the firm was valued at Rs. 3,00,000 and Bakul’s share was to be adjusted through the capital accounts of Akul and Chandan.
(v) Capital of the new firm was to be in the new profit sharing ratio of the continuing partners.
Prepare Revaluation account, Partners’ Capital accounts and the Balance Sheet of the reconstituted firm.
Balance Sheet of Akul, Bakul and Chandan as on 31-3-2018
|Liabilities||Amount (Rs. )||Assets||Amount (Rs. )|
|Sundry Creditors||45,000||Cash at Bank||42,000|
|Employees Provident Fund||13,000||Debtors 60,000|
|General reserve||20,000||Less : Provision for doubtful debts 2,000||58,000|
|Bakul 1,20,000||Plant and Machinery||1,80,000|