Chandan, Deepak and Elvish were partners in a firm sharing profits and losses in the ratio of 1 : 2 : 2. Their Balance Sheet as at 31st March, 2024 stood as follows:
Balance Sheet of Chandan, Deepak and Elvish as at 31st March, 2024
Liabilities | Amount (₹) | Assets | Amount (₹) |
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Capitals: | | Fixed Assets | 27,00,000 |
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Chandan | 7,00,000 | Stock | 3,00,000 |
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Deepak | 5,00,000 | Debtors | 2,00,000 |
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Elvish | 3,00,000 | Cash | 1,00,000 |
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General Reserve | 4,50,000 | | |
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Creditors | 13,50,000 | | |
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Total | 33,00,000 | Total | 33,00,000 |
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Chandan retired from the firm on 1st April, 2024 on the following terms:
[(i)] Fixed assets were to be depreciated by 10%.
[(ii)] Debtors of ₹ 30,000 were to be written off as bad debts.
[(iii)] Goodwill of the firm was valued at ₹ 6,00,000 and the retiring partner’s share is adjusted through the capital accounts of the remaining partners.
[(iv)] Chandan was paid through cash brought in by Deepak and Elvish in such a way so as to make their capitals proportionate to their new profit sharing ratio.
Prepare Revaluation Account and Partners’ Capital Accounts.