Kannan, Rahim and John are partners in a firm sharing profit and losses in the ratio of 5:3:2. The balance sheet as on 31st December, 2017 was as follows:
| Liabilities |
Rs |
Rs |
Asset |
Rs |
Rs |
| Capital accounts: |
|
|
Buildings |
|
90,000 |
| Kannan |
1,00,000 |
|
Machinery |
|
60,000 |
| Rahim |
80,000 |
|
Debtors |
|
30,000 |
| John |
40,000 |
2,10,000 |
Stock |
|
20,000 |
Workmen compensation
fund |
|
30,000 |
Cash at bank |
|
50,000 |
| Creditors |
|
20,000 |
Profit and loss A/c (loss) |
|
20,000 |
| |
|
2,70,000 |
|
|
2,70,000 |
John retires on 1st January 2018, subject to following conditions:
(i) To appreciate building by 10%
(ii) Stock to be depreciated by 5%.
(iii) To provide Rs.1,000 for bad debts
(iv) An unrecorded liability of Rs. 8,000 have been noticed.
(v) The retiring partner shall be paid immediately.
Prepare revaluation account, partners’ capital account and the balance sheet of the firm after retirement.
