X, Y and Z are partners sharing profits and losses in the ratio of 3 : 2 : 1. Balance Sheet of the firm as at 31st March, 2019 was as follows:

LiabilitiesAmount ( Rs.)AssetsAmount ( Rs.)
Creditors21,000Cash at Bank5,750
Workmen Compensation Reserve12,000Debtors – 40,000
Investments Fluctuation Reserve6,000Less: Provision for Doubtful Debts – (2,000)38,000
Capital A/c :Stock 30,000
X – 68,000Investment (Market Value  Rs. 17,600)15,000
Y 32,000Patents10,000
Z – 21,0001,21,000Machinery50,000
 Advertisement Expenditure5,250
 1,60,000 1,60,000

 Z retired on 1st April, 2019 on the following terms:
(a) Goodwill of the firm is to be valued at Rs. 34,800.
(b) Value of Patents is to be reduced by 20% and that of machinery to 90%.
(c) Provision for doubtful debts is to be created @ 6% on debtors.
(d) Z took over the investment at market value.
(e) Liability for Workmen Compensation to the extent of Rs. 750 is to be created.
(f) A liability of Rs. 4,000 included in creditors is not to be paid.
(g) Amount due to Z to be paid as follows: Rs. 5,067 immediately, 50% of the balance within one year and the balance by a draft for 3 Months.
Give necessary Journal entries for the treatment of goodwill, prepare Revaluation Account, Capital Accounts and the Balance Sheet of the new firm.


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