At 31 December 20X7, the balance sheet of A, B, and C who are equal partners, was as follows:

A retired at that date. In order to determine the amount due to him the following revaluations were made: Freehold premises £18,000; machinery and tools £16,000; investments £5,100. The value of the goodwill was agreed at £8,000. It was arranged that A should take over the investments in part payment of the amount due to him, the balance to be settled in cash. B and C would increase their capitals by paying in £10,000 and £6,000 respectively. These changes were all carried out.

Required:

(a) Prepare the revaluation account, bank account and capital accounts.

(b) Prepare the opening balance sheet of B and C.

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Fixed assets Freehold premises Machinery and tools Investment, at cost Current assets Stock Debtors Bank Less: Current liabilities Creditors Represented by: Capital accounts A B C E 16,000 12,800 12,100 40,900 (14,000) f 16,000 15,100 4,000 35,100 26,900 62,000 20,000 17,000 25,000 62,000