Abha, Binita and Rita were partners in a firm, sharing profits and losses in the ratio of 3 : 3 : 4. Their Balance Sheet as at 31st March, 2025 was as follows :
Balance Sheet of Abha, Binita and Rita as at
31st March, 2025
31st March, 2025
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|---|---|---|---|
| Capitals : | Land and Building | 7,50,000 | |
Abha 5,00,000 |
Plant and Machinery | 3,50,000 | |
Binita 4,00,000 |
Stock | 1,64,000 | |
Rita 3,00,000 |
12,00,000 | Debtors 90,000 | |
| General Reserve | 1,00,000 | Less : Provision for Doubtful Debts 2,000 | 88,000 |
| Outstanding Expenses | 80,000 | Cash | 48,000 |
| Creditors | 20,000 | ||
| 14,00,000 | 14,00,000 |
Rita retired on the above date and the following adjustments were agreed upon :
(i)
Goodwill of the firm was valued at ₹ 2,00,000.
(ii)
Valued of stock was reduced by ₹ 10,000.
(iii)
Provision for doubtful debts was created @ 5% on debtors.
(iv)
Provision for legal charges was made at ₹ 7,500.
(v)
Capital of the new firm was fixed at ₹ 10,00,000. The continuing partners decided to keep their capitals in the new profit sharing ratio. For this, necessary cash was paid off or brought in, as the case may be.
(vi)
Balance in Rita's capital account was transferred to her loan account.
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