A, B and C were partners, sharing profits and losses in the ratio of 2 : 2 : 1. B decides to retire on 31st March, 2018. On the date of his retirement, some of the assets and liabilities appeared in the books as follows: Creditors – Rs. 70,000; Building – Rs. 1,00,000; Plant and Machinery – Rs. 40,000; Stock of Raw Material – Rs. 20,000; Stock of Finished Goods – Rs. 30,000 and Debtors – Rs. 20,000.
The following was agreed among the partners on B’s retirement:
(a) Building to be appreciated by 20%.
(b) Plant and Machinery to be depreciated by 10%.
(c) A Provision of 5% on Debtors to be created for Doubtful Debts.
(d) Stock of Raw Materials too be valued at Rs. 18,000 and Finished Goods at Rs. 35,000.
(e) An Old Computer previously written off was sold for Rs. 2,000 as scrap.
(f) Firm had to pay Rs. 5,000 to an injured employee. Pass necessary journal entries to record the above adjustments and prepare the Revaluation Account.
