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Pratik, Nitish and Avinash are in partnership sharing profits equally. Avinash died on 30th June, 2023. Balance Sheet of the firm as at 31st March, 2023 was as follows:

Liabilities Assets

Creditors

Contingency Reserve

Investments Fluctuation Reserve

Capital A/cs:

Pratik

Nitish

Avinash

33,250

9,000

3,000

75,000

50,000

50,000

Cash

Bank

Debtors

Less: PDD

Stock

Investments (At cost)

Land and Building

Goodwill

2,500

10,000

23,000

25,000

12,500

1,00,000

47,250

  2,20,250   2,20,250

In order to determine the balance due to Avinash, it was agreed that:

(i) Land and Building be valued at ₹ 1,25,000.

(ii) Investments Fluctuation Reserve by brought up to ₹ 1,350.

(iii) Debtors were all good.

(iv) Closing Stock is valued at ₹ 23,500.

(v) Goodwill be valued at one year’s purchase of the average profit of the past five years.

(vi) Avinash’s share of profit till the date of death be calculated on the basis of average profit of the preceding three years.

Profits of preceding five years ended 31st March, were:

2019 – ₹ 28,750; 2020 – ₹ 35,000; 2021 – ₹ 22,500; 2022 – ₹ 20,000 and 2023 – ₹ 25,000.

You are required to show Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the new firm as at 30th June, 2023.

Anurag Pathak Changed status to publish February 16, 2024
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