On 31st March, 2019, the Balance Sheet of A, B and C who were sharing profits and losses in proportion to their capitals stood as:
Liabilities
|
Amount
(₹)
|
Assets
|
Amount
(₹)
|
Creditors |
10,800
|
Cash at Bank |
13,000 |
Bills Payable |
5,000
|
Debtors |
10,000
|
|
Capital A/cs: |
|
Less: Provision for Doubtful Debts |
200
|
9,800
|
A |
45,000 |
|
Stock |
9,000 |
B |
30,000
|
|
Machinery |
24,000 |
C |
15,000
|
90,000
|
Freehold Premises |
50,000
|
|
|
|
|
|
|
1,05,800
|
|
1,05,800
|
|
|
|
|
B retired and following adjustments were agreed to determine the amount payable to B:
(a) Out of the amount of insurance premium debited to Profit and Loss Account, ₹ 1,000 be carried forward as prepaid Insurance.
(b) Freehold Premises be appreciated by 10%.
(c) Provision for Doubtful Debts is brought up to 5% on Debtors.
(d) Machinery be reduced by 5%.
(e) Liability for Workmen Compensation to the extent of ₹ 1,500 would be created.
(f) Goodwill of the firm be fixed at ₹ 18,000 and B's share of the same be adjusted into the accounts of A and C who will share future profits in the ratio of 3/4th and 1/4th.
(g) Total capital of the firm as newly constituted be fixed at ₹ 60,000 between A and C in the proportion of 3/4th and 1/4th after passing entries in their accounts for adjustments, i.e., actual cash to be paid or to be brought in by continuing partners as the case may be.
(h) B be paid ₹ 5,000 in cash and the balance be transferred to his Loan Account.
Prepare Capital Accounts of Partners and the Balance Sheet of the firm of A and C.