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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, 2022 was as follows:

Liabilities Assets
Creditors

Workmen Compensation Reserve

Investments Fluctuation Reserve

Capital A/cs:

X

Y

Z

21,000

12,000

6,000

68,000

32,000

21,000

Cash at Bank

Debtors
Less: Provision for Doubtful Debts

Stock

Investment (Market Value ₹ 17,600)

Patents

Machinery

Goodwill

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40,000
2,000

 

5,750

38,000

30,000

15,000

10,000

50,000

6,000

5,250

1,60,000 1,60,000

Z retired on 1st April, 2022 on the following terms:

a) Goodwill of the firm is to be valued at ₹ 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 @6% on debtors.

d) Z took the investment at market value.

e) Liability for Workmen Compensation to the extent of ₹ 750 is to be created.

f) A liability of ₹ 4,000 included in creditors is not to be paid.

g) Amount due to Z to be paid as follows:
₹ 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.

Anurag Pathak Changed status to publish June 22, 2023
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