X, Y and Z were partners in a firm sharing profits and losses in the ratio of 5:3:2. Their Balance Sheet as at 31st March, 2020 was as follows:

Balance Sheet of X, Y and Z as at 31st March, 2020

Liabilities Amount ₹ Assets Amount ₹
Creditors 66,500 Land 3,00,000
Bills Payable 10,000 Furniture 10,000
Profit & Loss Account 22,500 Stock 20,000
Provision for Legal Claims
Debtors 20,000
Capitals: Less: Provision for
Doubtful Debts 500

X 1,20,000 Patents 45,000
Y 97,000 Bank 50,000
Z 71,000 2,88,000
4,44,500 4,44,500

On the above date, Z retired. The terms of retirement were:

  1. Goodwill of the firm was valued at 80,000
  2. Land will be appreciated by 10% and furniture will be depreciated by 5%.
  3. Provision for legal claims will be made at 61,000
  4. 90,000 from Z’s capital account will be transferred to his Loan Account and the balance will be paid to him by cheque.

Prepare Revaluation Account and Partners’ Capital Accounts.

Marks-8, CBSE:2020-21/Compartment/Q-21*

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