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The Balance Sheet of Palak, Anil and Arpit who were sharing profits and losses in the ratio of 5 : 3 : 2 as at 31st March, 2023:

Liabilities Assets

Creditors

General Reserve

Workmen Compensation Reserve

Profit & Loss A/c

Palak’s Capital

Anil’s Capital

Arpit’s Capital

1,00,000

20,000

1,00,000

1,70,000

80,000

1,24,000

66,000

Cash at Bank

Sundry Debtors

Stock

Fixed Assets

Goodwill

80,000

2,00,000

1,60,000

1,20,000

1,00,000

  6,60,000   6,60,000

Palak retired on 1st April, 2023 on the following terms:

(a) Goodwill of the firm is to be valued at ₹ 1,60,000 and Palak’s share of the same be adjusted to that of Anil and Arpit who are going to share future profits in the ratio of 2 : 3.

(b) Fixed Assets are overvalued by ₹ 5,000.

(c) Make a Provision for Doubtful Debts at 5% on Sundry Debtors.

(d) A liability for claim, included in creditors for ₹ 20,000 is settled at ₹ 16,000.

(e) A calim of ₹ 16,000 on account of Workmen Compensation to be provided for.

(f) Anil and Arpit decided that general reserve and accumulated profits are to appear in the books of new firm at their original figures after adjusting claim of Workmen Compensation from Workmen Compensation Reserve.

(g) The amount to be paid to Palak by Anil and Arpit in such a way that their capitals are proportionate to their profit sharing ratio and leave a balance of ₹ 30,000 in the Bank Account.

Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of the new firm.

Anurag Pathak Changed status to publish March 3, 2024
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