Kushal Kumar and Kavita were partners in a firm sharing profits in the ratio of 3:1:1. On 1st April, 2012 their Balance Sheet was as follows:
On the above date Kavita retired and the following was agreed:
(i) Goodwill of the firm was valued at Rs 40,000.
(ii) Land was to be appreciated by 30% and building was to be depreciated by Rs 1,00,000.
(iii) Value of furniture was to be reduced by Rs 20,000.
(iv) Bad debts reserve is to be increased to Rs 15,000.
(v) 10% of the amount payable to Kavita was paid in cash and the balance was transferred to her Loan Account.
(vi) Capitals of Kushal and Kumar will be in proportion to their new profit sharing ratio. The surplus/deficit, if any in their Capital Accounts will be adjusted through Current Accounts.
Prepare Revaluation Account, Partner's Capital Accounts and Balance Sheet of Kushal and Kumar after Kavita's retirement.
Capital of Kushal before adjustment = Rs 3,63,000
Capital of Kumar before adjustment = Rs 3,01,000
Total capital = Rs 6,64,000
Kushal’s adjusted capital= ¾ * Rs 6,64,000 = Rs 4,98,000
Kumar’s adjusted capital= ¼ * Rs 6,64,000 = Rs 1,66,000