| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| Creditors | 50,000 | Cash at Bank | 40,000 |
| Employees’ Provident Fund | 10,000 | Sundry Debtors | 1,00,000 |
| Profit and Loss A/c | 85,000 | Stock | 80,000 |
| Capital A/c : | Fixed Assets | 60,000 | |
| X – 40,000 | |||
| Y – 62,000 | |||
| Z – 33,000 | 1,35,000 | ||
| 2,80,000 | 2,80,000 |
X retired on 1st April, 2019 and Y and Z decided to share profits in future in the ratio of 3 : 2 respectively.
The other terms on retirement were:
(a) Goodwill of the firm is to be valued at Rs. 80,000.
(b) Fixed Assets are to be depreciated to Rs. 57,500.
(c) Make a Provision for Doubtful Debts at 5% on Debtors.
(d) A liability for claim, included in Creditors for Rs. 10,000, is settled at Rs. 8,000.
The amount to be paid to X by Y and Z in such a way that their Capitals are proportionate to their profit-sharing ratio and leave a balance of Rs. 15,000 in the Bank Account.
Prepare Profit and Loss Adjustment Account and Partners’ Capital Accounts.
SOLUTION
