Gini, Bini and Mini were in partnership sharing profits and losses in the ratio of 5:2:2. Their Balance Sheet as at 31st March, 2021 was as follows:
Balance Sheet as at 31st March,2021
|Liabilities||Amount (₹)||Assets||Amount (₹)|
Workmen’s Compensation Reserve
Less: Provision For
Doubtful Debts (2,300)
On 31st March, 2021, Gini retired from the firm. All the partners agreed to revalue the assets and liabilities on the following basis:
(i) Bad debts amounted to ₹5,000. A provision for doubtful debts was to be maintained at 10% on debtors.
(ii) Partners have decided to write off existing goodwill.
(iii) Goodwill of the firm was valued at ₹54,000 and be adjusted into the Capital Accounts of Bini and Mini, who will share profits in future in the ratio of 5:4.
(iv) The assets and liabilities valued as: Inventories ₹1,30,000; Machinery ₹82,000; Furniture ₹1,95,000 and Building ₹6,00,000.
(v) Liability of ₹23,000 is to be created on account of Claim for Workmen Compensation.
(vi) There was an unrecorded investment in shares of ₹25,000. It was decided to pay off Gini by giving her unrecorded investment in full settlement of her part payment of ₹28,000 and remaining amount after two months.
Prepare Revaluation Account and Partners’ Capital Accounts as on 31st March, 2021.