A, B and C are partners sharing profits equally. Their Balance Sheet on 30.6.2018 was :

On 1.7.2018 A retires and it is agreed that he should be paid in full on that date all his dues. So, goodwill is calculated on the basis of 3 years’ purchase of average profits of the past 3 years, such profits amounted to ₹1,00,000; ₹1,20,000 and ₹1,40,000. In order to meet this obligation, a bank loan is arranged as at 1.7.2018 for ₹2,00,000 by pledging fixed assets as security. To compensate a loyal manager D, it is agreed between B and C that D should be admitted as a partner who would bring in over and above a capital of ₹1,00,000, his share of goodwill in cash to serve as working capital. B and C agree to forego one-third of their individual share of profit to D. Show Journal and the Balance Sheet.

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Capital Account -- A Capital Account --B Capital Account --C Current Account -- A Current Account -- B Current Account -- C Creditors Liabilities ₹ 1,00,000 Land and Property 1,00,000 Plant and Machinery 2,00,000 Furniture 50,000 Stock-in-trade 75,000 Debtors 25,000 Cash at bank 1,50,000 7,00,000 Assets ₹ 1,00,000 2,00,000 50,000 1,00,000 1,00,000 1,50,000 7,00,000