Case 5.

The balance sheet of partners Salim, Sameer and Said who were sharing profits in the ratio of 5:3:2 is given below as on March 31st 2020.

Fig1

Sameer retires on 31st March 2020 and the following adjustments are agreed upon his

retirement.

a) Stock was valued at OMR 172,000.

b) Furniture were valued at OMR 80,000.

c) An amount of OMR 10,000 due from Mr.Hafid, a debtor, was doubtful and a provision for the same was required.

d) Goodwill of the firm was valued at OMR 200,000 but it was decided not to show goodwill in the books of accounts.

e) Sameer was paid OMR 40,000 immediately on retirement and balance was transferred to his loan account.

f) Salim and Said were to share future profits in the ratio of 3:2.

You are required to prepare;

i) Revaluation Account (4 marks)

ii) Capital Account of partners (4 marks)

iii) Why do firm revaluate assets and reassess their liabilities on retirement.

(2 marks)

Case - 6

Using the information in Case 5 prepare reconstituted Balance sheet of the firm. (5 marks)

Balance sheet As on March 31st 2020. Liabilities Amount (OMR) Assets Amount (OMR) Capitals Land 4,00,000 Salim 7,20,000 Building 3,80,000 Sameer 4,15,000 Plant & Machinery Said 3,45,000 14,80,000 Furniture 4,65,000 Reserve Fund 1,80,000 Stock 77,000 Sundry Creditors 1,24,000 Debtors 1,85,000 Outstanding Expenses 16,000 Cash 1,72,000 1,21,000 18,00,000 18,00,000 Fig1