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in Accounting for Retirement and Death of Partner by (63.4k points)
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X, Y and Z were partners in a firm, sharing profits in the ratio of 1/2 : 1/3 : 1/6 respectively. The balance sheet of the firm on 31st December, 2017 stood as follows.
Y retires from the firm on the above date subject to the following conditions :
(a) Goodwill of the firm be valued at Rs 9,000 and is not to be shown in the books of the firm,
(b) Machinery would be depreciated by 10% and motor vans by 15%.
(c) Stock would be appreciated by 20% and building by 10%.
(d) The provision for doubtful debts would be increased by Rs 975.
(e) Liability for workmen compensation to the extent of Rs 825 would be created.
It was agreed that X and Z would share profit in future in the ratio of 3 : 2 respectively.
You are required to prepare the Revaluation account, Capital account of partners and Balance Sheet of the firm after the retirement of Y.
Also solve if it is assumed that partners decided to show the assets and liabilities at their old book values.

1 Answer

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Best answer

First Method: Revaluation Account



Y's share of capital Rs.3000 x and z will adjust in 3:7

Second Method:

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