Q3. The balance sheet of 'Anand Traders, Wardha' is as follows. Partners share profits and losses as 5/10 , 2/10, 3/10.

Balance Sheet as on 31st March, 2013.

Liabilities	Amount (Rs.)	Assets		Amount (Rs.)
Capital Accounts		Plant and machinery		32,000
Sunil	36,000	Factory Building		40,000
Pankaj	32,000	Stock		20,400
Paresh	17,600	Debtors	16,800
Creditors	21,200	Less: R.D.D.	800	16,00
General Reserve	14,000	Cash		12,400
	1,20,800			1,20,800

Pankaj retired from the business on 1st April, 2013 on the following terms:

(1) The assets were revalued as under .....

(i) Stock at Rs. 28,000.

(ii) Factory building is appreciated by 10%.

(iii) Reserve for doubtful debts is to be increased up to Rs. 1,000.

(iv) Plant and machinery is to be depreciated by 10%

(2) The goodwill of the retiring partner is to be valued at Rs. 8,000 and the remaining partners decided that goodwill be written back in their new profit sharing ratio which will be 5:3.

(3) Amount due to Pankaj is to be transferred to his loan account.

Prepare : (a) Profit and Loss adjustment account

(b) Capital account of partners.

(c) Balance sheet of new firm.

Answer:

In the books of Anand Traders, Wardha

Profit and Loss Adjustment A/c

Particulars	Amount Rs.	Amount Rs.	Particulars	Amount Rs.	Amount Rs.
To R.D.D. A/c		200	By Stock A/c		7600
To Plant & Machinery A/c		3200	By Factory Building A/c		4000
To Revaluation Profit :
Sunil Capital A/c	4100
Pankaj Caipital A/c	1640
Paresh Capital A/c	2460	8200
		11600			11600

Partners’ Capital Accounts

Particulars	Sunil	Pankaj	Paresh	Particulars	Sunil	Pankaj	Paresh
To Goodwill A/c	5000	-	3000	By Balance b/d	36000	32000	17600
To Loan A/c		44440		By General Reserve A/c	7000	2800	4200
To Balance C/d	42100		21260	By Profit and Loss Adjustment A/c	4100	1640	2460
				By Goodwill A/c	-	8000	-
To Balance C/d	42100		21260
	47100	44440	24260		47100	44440	24260

Balance Sheet as on 1st April, 2013

Liabilities	Amount Rs.	Amount Rs.	Assets	Amount Rs.	Amount Rs.
Capital A/c:			Stock	20400
Sunil	42100		Add: Appreciation	7600	28000
Paresh	21260	63360	Factory Building	40000
			Add: Appreciation	4000	44000
Creditors		21200	Debtors	16800
Pankaj’s Loan		44440	Less: R.D.D.	1000	15800
			Plant & Machinery	32000
			Less: Depreciation	3200	28800
			Cash		12400
		129000			129000