A, B and C were in partnership sharing profits and losses in the ratio 3:2:1. Their Balance Sheet as on 31.3.2018 was as under:

A retired on 1.4.2018 and the partnership deed provided inter alia that in the event of admission, retirement or death of a partner, the assets and liabilities are to be revalued and that goodwill of the firm is to be computed on the basis of 2 years’ purchase of the correct profit of the last 4 years.

It is discovered that the accounts required adjustments owing to certain mistakes in earlier years. On 1.10.2015, repairs to machinery for ₹6,000 had been wrongly debited to Machinery Account; and on 1.4.2016, a piece of furniture, whose book value was ₹2,000 was disposed of for ₹800 but the proceeds were wrongly credited to Sales Account. The partners had been charging depreciation on all fixed assets at 10% p.a. on the reducing balance system on a time basis. Profits for the last four years without adjusting the above-mentioned mistakes were as follows:

Revaluation on the date of retirement was:

B and C, decided to share future profits, after A’s retirement, in the ratio of 3:2. It was further agreed that the retiring partner shall be credited with his due proportion of goodwill, without raising a Goodwill Account in the books. A is to be paid 50% of the amount due to him on retirement immediately and the balance is to be transferred to his Loan Account carrying interest at 6% p.a. B and C are to bring necessary cash (in their new ratio) subject to the condition that a cash balance of ₹20,000 is to be maintained as working capital.

Show the Capital Accounts of the partners and the Balance Sheet of the firm after all the above mentioned transactions have been carried out. Ignore fractions.

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Capital - A Capital - B Capital - C Sundry Creditors Bank loan Other liabilities Liabilities ₹ 60,000 Machinery 50,000 Furniture 40,000 Motor car 72,000 Stock 30,000 Sundry Debtors 20,000 Cash at bank 2,72,000 Assets ₹ 80,000 15,000 30,000 50,000 60,000 37,000 2,72,000