L, M and N were partners in a firm sharing profit & losses in the ratio of 2:2:3. On 31st March 2023, their Balance Sheet was as follows:
|Creditors||80,000||Land and Building||5,00,000|
|Long term debts||2,00,000||Furniture||3,50,000|
|Employees provident fund||
|Deferred Advertisement Expenditure||
On 31st March 2023, M retired from the firm and remaining partners decided to carry on business. It was decided to revalue assets and liabilities as under:
- a) Land and Building be appreciated by ₹2,40,000 and Machinery be depreciated 10%.
- b) 50% of investments were taken by the retiring partner at book value.
- c) Provision for doubtful debts was to be made at 5% on debtors.
- d) Stock will be valued at market price which is ₹1,00,000 less than the book value.
- e) Goodwill of the firm be valued at ₹5,60,000. L and N decided to share future profits and losses in the ratio of 2:3.
- f) The total capital of the new firm will be ₹32,00,000 which will be in proportion of profit – sharing ratio of L and N.
- g) Gain on revaluation account amounted to ₹1,05,000.
Prepare Partner’s Capital accounts and Balance sheet of firm after M’s retirement.