Question

Following is the Balance sheet of A B and C as at 31` March 2018. They shared profits in theratio of 2:2:1BALANCE SHEETAs at March 31 2018Liabilities2AssetsGeneral reserve2 50 000 Cash at Bank10 000Sundry Creditors5 00 000 Stock3 40 000Partner's Loan A/cDebtors6 00 000B1 80 000Less:Provision forС1.20 0003 00 0005 75 000Capitals:doubtful debts25 000340 0005 00 000Land & buildings60 000B3 00 000Advertisement suspense a/c15 000с1 50 0009 50 000Profit & Loss a/cTotal20 00 00 Total020 00 000B retires on 1 april 2018 on the following terms:(1) Stock is overvalued by 20 000 and Land & Buildings are undervalued by 1 00 000.(2) Provision for doubtful debts is to be increased to 30 000.(3) Old credit balances of Sundry Creditors 40 000 be written off.(4) A computer purchased on 19 October 2017 for 50 000 debited to office expenses a/e isto bring into account charging depreciation @ 20% p.a.(5) Goodwill of the firm is valued at 21 50 000 and the amount due to B be adjusted in thecapital accounts of A and C.Prepare Revaluation A/c Partner's Capital A/c Partner's Current A/c and the Balance Sheetof the reconstituted firm.18 `​

Answer 1

Answer:

(2) provision for doubtful debts is to be increased to 30,000