Sangeeta, Saroj and Shanti are partners sharing profits and losses in the ratio of 5 : 3 : 2. Shanit retired and on the date of her retirement, following adjustements were agreed:

  • The value of furniture is to be increased by ₹ 12,000
  • The value of stock to be decreased by ₹ 10,000.
  • Machinery of the books value of ₹ 50,000 is to be reduced by 10%.
  • A Provision for doubtful debts @ 5% is to be created on debtors of book value of ₹ 40,000.
  • Unrecorded investment worth ₹ 10,000.
  • A creditor of ₹ 1,000 is not likely to be claimed, hence, is to be written back.

Pass necessary Journal entries.
Solution :