Following is the Balance Sheet of Jain, Gupta and Malik as on March 31, 2016. Books of Jain, Gupta and Malik
The partners have been sharing profits in the ratio of 5:3:2. Malik decides to retire from business on April 1, 2016 and his share in the business is to be calculated as per the following terms of revaluation of assets and liabilities: Stock, Rs. 20,000; Office furniture, Rs. 14,250; Plant and Machinery Rs. 23,530; Land and Building Rs. 20,000. A provision of Rs. 1,700 to be created for doubtful debts. The goodwill of the firm is valued at Rs. 9,000.
The continuing partners agreed to pay Rs. 16,500 as cash on retirement of Malik, to be contributed by continuing partners in the ratio of 3:2. The balance in the capital account of Malik will be treated as loan. Prepare Revaluation account, capital accounts, and Balance Sheet of the reconstituted firm.
