X, Y and Z were partners in a firm sharing profit’s in the firm of 5:3:2. On 31-3-2015 their Balance Sheet was as follows:
On the above date Y retired and X and Z agreed to continue the business on the following terms:
(1) Goodwill of the firm was valued at ₹51,000
(2) There was a claim of 4,000 for Workmen’s Compensation.
(3) Provision for bad debts was to be reduced by 1,000.
(4) Y will be paid 8,200 in cash and the balance will be transferred in his loan account which will be paid in four equally yearly instalments together with interest @ 10% p.a.
(5) The new profit sharing ratio between X and Z will be 3:2 and their capitals will be in their new profit sharing ratio. The Capital adjustments will be done by opening current Accounts.
Prepare Revaluation Account. Partner’s Capital Accounts and the Balance Sheet of reconstituted firm