|Capital A/c :||Land and Building||4,00,000|
|Kusum – 4,00,000||Machinery||6,00,000|
|Sneh – 6,00,000||Closing Stock||2,00,000|
|Usha – 4,00,000||14,00,000||Sundry Debtors – 2,20,000|
|Employees’ Provident Fund||70,000||Less: Provision for Doubtful Debts – (20,000)||2,00,000|
|Workmen Compensation Reserve||30,000||Cash at Bank||2,00,000|
On 1st April, 2019, Kusum retired from the firm and the remaining partners decided to carry on the business. It was agreed to revalue the assets and reassess the liabilities on that date, on the following basis:
(a) Land and Building be appreciated by 30%.
(b) Machinery be depreciated by 30%.
(c) There were Bad Debts of Rs. 35,000.
(d) The claim against Workmen Compensation Reserve was estimated at Rs. 15,000.
(e) Goodwill of the firm was valued at Rs. 2,80,000 and Kusum’s share of goodwill was adjusted against the Capital Accounts of the continuing partners Sneh and Usha who have decided to share future profits in the ratio of 3: 4 respectively.
(f) Capital of the new firm in total will be the same as before the retirement of Kusum and will be in the new profit-sharing ratio of the continuing partners.
(g) Amount due to Kusum be settled by paying Rs. 1,00,000 in cash and balance by transferring to her Loan Account which will be paid later on.
Prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet of the new firm after Kusum’s retirement.