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Balance Sheet of Vikas, Mukta and Anuj who are sharing profits in the ratio of 2 : 3 : 1 as at 31st March, 2023 is given below:

Liabilities Assets  

Creditors

Bills Payable

Workmen Compensation Reserve

Investment Fluctuation Reserve

Capital A/cs:

Vikas

Mukta

Anuj

2,00,000

1,60,000

20,000

10,000

 

1,00,000

2,00,000

3,00,000

Bank

Debtors

Less: PDD

Stock

Investment

(Market Value: ₹ 46,000)

Land and Building

Goodwill

Advertisement Expenditure

(Deferred Revenue)

 

3,00,000

10,000

2,96,000

 

2,90,000

80,000

50,000

 

2,50,000

12,000

12,000

  9,90,000     9,90,000

On 1st April, 2023, Anuj retired and Vikas and Mukta continued in partnership, sharing future profits and losses in the ratio of 3 : 2. It is agreed to revalue the assets and reassess the liabilities as follows:

(i) Land and Building are to be valued at ₹ 2,75,000 and revalue stock at ₹ 72,000.

(ii) Provision for doubtful debts is to be made equal to 5% of the debtors.

(iii) Claim on account of Workmen Compensation is ₹ 8,000.

(iv) A debtor whose due of ₹ 6,000 were written off as bad debts paid 50% in full settlement.

(v) A provision of ₹ 3,000 to be made in respect of an outstanding bill for repairs.

(vi) Goodwill is to be valued at 2 year’s purchase of average profit of last three completed years. The profits for the years ended 31st March, were: 2021: ₹ 48,000; 2022: ₹ 93,000; 2023: ₹ 1,38,000.

(vii) 50% of the Amount due to Anuj is to be paid on retirement and balance within one year.

(viii) Vikas and Mukta decided that after the adjustment of Workmen Compensation Claim from Workmen Compensation Reserve and difference between market value and book value of investment from investment Fluctuation Reserve, their remaining balances and accumulated losses will continue to exist in the Balance Sheet of the new firm. Anuj’s share in such accumulated reserves and losses would be adjusted by Opening Current Accounts and Vikas and Mukta

Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of Vikas and Mukta after Anuj’s retirement.

Anurag Pathak Changed status to publish March 3, 2024
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