A, B and C are partners sharing profits and losses in the ratio of 3:2:1. Their Balance Sheet on 31.12.2017 was :

C retires on that date subject to the following conditions:

(i) Goodwill of the firm is to be valued at ~ 36,000;

(ii) Building is to be appreciated by 20%;

(iii) Plant & Furniture are to be depreciated by 10% and 15% respectively; and

(iv) Provision is to be made for doubtful debts at 5%; A and B are to bring in cash, if necessary, in their profit-sharing ratio to pay off C’s dues on retirement and leave a sum of ₹10,000 as working capital. Prepare Revaluation Account, Partners’ Capital Account and new Balance Sheet as at 1.1.2018.

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Capital Accounts: A B C Reserve Profit & Loss A/c Creditors Liabilities ₹ Cash at bank 45,000 Debtors 35,000 Stock 25,000 Plant 15,000 Building 12,000 Furniture 20,500 1,52,500 Assets ₹ 3,500 30,000 25,000 40,000 50,000 4,000 1,52,500