Narang, Suri and Bajaj are partners in a firm sharing profits and losses in proportion of `1//2` , `1//6` and `1//3` respectively. The Balance Sheet on April 1, 2015 was as follows:

Bajaj retires from the business and the partners agree to the following:
a) Freehold premises and stock are to be appreciated by `20%` and `15%` respectively.
b) Machinery and furniture are to be depreciated by 10% and 7% respectively.
c) Bad Debts reserve is to be increased to Rs. 1,500.
d) Goodwill is valued at Rs. 21,000 on Bajaj’s retirement.
e) The continuing partners have decided to adjust their capitals in their new profit sharing ratio after retirement of Bajaj. Surplus/deficit, if any, in their capital accounts will be adjusted through current accounts.
Prepare necessary ledger accounts and draw the Balance Sheet of the reconstituted firm.

Answer

Profit on Revaluation, Rs. 6,960; Balance in Capital Accounts of Narang, Rs. 49,230; and that of Suri, Rs. 16,410. Amount at Credit in Bajaj Capital is Rs. 41,320.