Answer :
Answer:
To solve this problem, we will follow these steps:
1. **Prepare Revaluation Account** to adjust the values of assets and liabilities based on the given terms.
2. **Update Partners' Capital Accounts** considering the new values from the revaluation.
3. **Prepare the Balance Sheet** after Jagdish's retirement.
### Step 1: Revaluation Account
**Revaluation of Assets and Liabilities:**
- **Furniture (Decrease by 10%):**
\[ 10,000 - 10% \text{ of } 10,000 = 10,000 - 1,000 = 9,000 \]
Revaluation Loss = \( 10,000 - 9,000 = 1,000 \)
- **Plant and Machinery (Decrease by 5%):**
\[ 40,000 - 5% \text{ of } 40,000 = 40,000 - 2,000 = 38,000 \]
Revaluation Loss = \( 40,000 - 38,000 = 2,000 \)
- **Stock (Increase by 20%):**
\[ 30,000 + 20% \text{ of } 30,000 = 30,000 + 6,000 = 36,000 \]
Revaluation Gain = \( 36,000 - 30,000 = 6,000 \)
- **Building (Increase by 10%):**
\[ 60,000 + 10% \text{ of } 60,000 = 60,000 + 6,000 = 66,000 \]
Revaluation Gain = \( 66,000 - 60,000 = 6,000 \)
- **Provision for Doubtful Debts (Increase to 1,500):**
\[ 1,500 - 1,000 = 500 \]
Revaluation Loss = \( 1,500 - 1,000 = 500 \)
**Revaluation Account:**
| Particulars | Amount (₹) |
|----------------------------|------------|
| Furniture | -1,000 |
| Plant and Machinery | -2,000 |
| Stock | +6,000 |
| Building | +6,000 |
| Provision for Doubtful Debts| +500 |
| Jagdish's Loan (Interest) | +4,000 | (Interest on Loan of ₹40,000 @ 10% p.a.)
| Total | +12,500 |
### Step 2: Partners' Capital Accounts
**Varun's Capital Account:**
- Original Capital: ₹40,000
- Share of Profit: \( \frac{2}{5} \times 12,500 = 5,000 \)
- New Balance: \( 40,000 + 5,000 = 45,000 \)
**Tarun's Capital Account:**
- Original Capital: ₹30,000
- Share of Profit: \( \frac{1}{5} \times 12,500 = 2,500 \)
- New Balance: \( 30,000 + 2,500 = 32,500 \)
**Jagdish's Loan Account:**
- Amount due to Jagdish: ₹40,000
- Interest for 1 year @ 10%: ₹4,000
- Total Loan Account Balance: ₹44,000
### Step 3: Balance Sheet after Jagdish's Retirement
**Liabilities:**
| Liabilities | Amount (₹) |
|-------------------------------|------------|
| Sundry Creditors | 25,000 |
| Bills Payable | 12,000 |
| Provision for Doubtful Debts | 1,500 |
| Jagdish's Loan | 44,000 |
| Reserve | 15,000 |
| Total Liabilities | 97,500 |
**Assets:**
| Assets | Amount (₹) |
|------------------------------|------------|
| Cash | 3,000 |
| Sundry Debtors | 19,000 |
| Less: Provision for Doubtful Debts | 1,500 |
| Closing Stock | 36,000 |
| Furniture | 9,000 |
| Plant and Machinery | 38,000 |
| Building | 66,000 |
| Total Assets | 172,500 |
**Capital Accounts:**
| Partners | Amount (₹) |
|-------------------------|------------|
| Varun | 45,000 |
| Tarun | 32,500 |
| Total Capital | 77,500 |
**Balance Sheet:**
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|----------------------------------|------------|--------------------------------|------------|
| Sundry Creditors | 25,000 | Cash | 3,000 |
| Bills Payable | 12,000 | Sundry Debtors | 19,000 |
| Provision for Doubtful Debts | 1,500 | Less: Provision for Doubtful Debts | 1,500 |
| Jagdish's Loan | 44,000 | Closing Stock | 36,000 |
| Reserve | 15,000 | Furniture | 9,000 |
| | | Plant and Machinery | 38,000 |
| Total Liabilities | 97,500 | Building | 66,000 |
| | | Total Assets | 172,500 |
| | | | |
| Capital Accounts: | | | |
| Varun | 45,000 | Total Liabilities | 172,500 |
| Tarun | 32,500 | | |
| | | Total Capital | 77,500 |
| Total Capital and Liabilities | 172,500 | Total Capital and Liabilities | 172,500 |
This completes the preparation of the Balance Sheet after Jagdish's retirement, incorporating the revaluation adjustments and changes in the partners' capital accounts
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