X, Y and Z were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Z died on 30th June, 2018. The Balance Sheet of the firm as at that 31st March, 2018 is as follows:
The following decisions were taken by the remaining partners:
(a) A Provision for Doubtful Debts is to be raised at 5% on Debtors.
(b) While Machinery to be decreased by 10%, Furniture and Stock are to be appreciated by 5% and 10% respectively.
(c) Advertising Expenses Rs. 4,200 are to be carried forward to the next accounting year and therefore, it is to be adjusted through the Revaluation Account.
(d) Goodwill of the firm is valued at Rs. 60,000.
(e) X and Y are to share profits and losses equally in future.
(f) Profit for the year ended 31st March, 2018 was Rs. 16,000 and Z’s share of profit till the date of death is to be determined on the basis of profit for the year ended 31st March, 2018.
(g) The Fixed Capital Method is to be converted into the Fluctuating Capital Method by transferring the Current Account balances to the respective Partners Capital Accounts. Prepare the Revaluation Account, Partners Capital Accounts and prepare C’s Executors’s Account to show that C’s Executors were paid in two half-yearly installments plus interest of 10% p.a. on the unpaid balance. The first installments was paid on 31st December, 2018.
