N, S and B were partners in a firm sharing profits and losses in proportion of ½, 1/6, and 1/3 respectively. The Balance Sheet of the firm as at 31st March, 2017 was as follows:

Balance Sheet of N, S and B as at 31.3.2017

Liabilities Amount (Rs.) Assets Amount (Rs.)
Capital:   Freehold Premises 40,000
N     30,000   Machinery 30,000
S      30,000   Furniture 12,000
B      28,000 88,000 Stock 22,000
Bills Payable 12,000 Sundry Debtors    20,000  
General Reserve 12,000 Less: Provision for Bad Debts                1,000   19,000
Sundry Creditors 18,000 Cash 7,000
  1,30,000   1,30,000
  B retired from the business on the above date and the partners agreed to the following: (i) Freehold premises and stock were to be appreciated by 20% and 15% respectively. (ii) Machinery and furniture were to be depreciated by 10% and 7% respectively. (iii) Provision for bad debts was to be increased by Rs.  1,500. (iv) On B’s retirement goodwill of the firm was valued at Rs.  21,000. (v) The continuing partners decided to adjust their capitals in their new profit-sharing ratio after retirement of B. Surplus/deficit, if any, in their capital accounts was to be adjusted through their current accounts. Prepare Realisation Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.

Marks-8, CBSE:2018-19/Main/05/Q-16*

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