Accountancy > Accounting For Partnership Firms > Retirement And Death Of A Partner
Sia, Manav and Ajay were partners in a firm sharing profits and losses in the ratio of 2:2:1. On 31st March, 2024, their Balance Sheet was as follows:
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Creditors | 4,00,000 | Land and Building | 8,50,000 |
| Bank Overdraft | 3,00,000 | Machinery | 6,00,000 |
| Capitals: | Investments | 2,00,000 | |
| Sia 9,00,000 | Stock | 6,00,000 | |
| Manav 8,00,000 | Debtors | 3,00,000 | |
| Ajay 2,00,000 | 19,00,000 | Bank | 1,00,000 |
| Employee's Provident Fund | 2,00,000 | Profit and Loss Account | 1,50,000 |
| Total | 28,00,000 | Total | 28,00,000 |
On 31st March, 2024, Manav retired from the firm and the remaining partners decided to carry on the business. The assets and liabilities were revalued which resulted into a gain of ₹1,20,000 because of the increase in the value of Land and Building by the same amount. (i) 40% of Land and Building were taken by retiring partner at revalued value. (ii) Goodwill of the firm be valued at ₹4,00,000. Sia and Ajay decided to share future profits and losses in the ratio of 3: 2. (iii) The total capital of the new firm will be ₹20,00,000 which will be in proportion of the new profit sharing ratio of Sia and Ajay. For this, necessary cash was brought in or was paid off to the partners, as the case may be. Prepare Partners' Capital Accounts.
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