25 :- Leena, Madan and Naresh were partners sharing profits and losses in the ratio of 2:2:1. Madan retired on 31st March 2024. On the date of his retirement, some of the assets and liabilities appeared in the books as follows
Creditors Rs 70,000; Building Rs 1,00,000; plant and machinery Rs 40,000; Stock of raw materials Rs 20,000; Stock of finished goods Rs 30,000 and Debtors Rs 20,000
Following was agreed among the partners on Madan’s retirement
(a) Building to be appreciated by 20%
(b) Plant and machinery to be reduced by 10%
(c) A provision of 5% on debtors to be created for doubtful debts
(d) Stock of raw materials to be valued at Rs 18,000 and finished goods at Rs 35,000
(e) An old computer previously written off was sold for Rs 2,000 as scrap.
(f) Firm had to pay Rs 5,000 to an injured employee
Pass the necessary journal entries to record the above adjustments and prepare the revaluation account.
Solution :-
