A, B and C were Partners sharing profits in the proportions of 1/2, 1/3 and 1/6 respectively. The balance sheet of the firm on 31st March 1998 was as follows : Liabilities | Sundry creditors 12,600 , provident fund 3000 , Reserve fund 9000 , Capitals : A - 40000 , B - 36500 , C - 20000 ,, Assets | Cash at bank 4100 , Debtors 30000 less : provision 1000 = 29000 , Stock 25000 , Investment 10000 , Patents 5000 , plant and Machinery 48000
Cretired on the above date on the following terms:
(1) Goodwill of the firm was valued at Rs. 27,000, but it was not to remain in the
books of the new firm.
(i) Value of the patents was to be reduced by 20% and that of Plant and Machinery by 10%
(iii) Provision for doubtful debts was to be raised to 6%.
(iv) C took over the Investments at a value of Rs. 15,800. (v) Liability on account of Provident Fund was only Rs. 2,500.
Show the necessary Journal Entry for the treatment of goodwill, prepare revaluation account, Capital accounts of the partners and the Balance Sheet of A and B after C's retirement.
