Comprehension Passage
Radha, Sheela, and Meena were in partnership sharing profits and losses in the proportion of 3:2:1. On April 1, 2019, Sheela retires from the firm. On that date, their Balance Sheet was as follows:
Balance Sheet as on April 1, 2019
| Liabilities | Amount (Rs.) |
|---|---|
| Trade Creditors | 3,000 |
| Bills Payable | 4,500 |
| Expenses Owing | 4,500 |
| General Reserve | 13,500 |
| Capitals: | |
| Radha | 15,000 |
| Sheela | 15,000 |
| Meena | 15,000 |
| Total | 70,500 |
| Assets | Amount (Rs.) |
|---|---|
| Cash-in-Hand | 1,500 |
| Cash at Bank | 7,500 |
| Debtors | 15,000 |
| Stock | 12,000 |
| Factory Premises | 22,500 |
| Machinery | 8,000 |
| Loose Tools | 4,000 |
| Total | 70,500 |
The terms were:
(a) Goodwill of the firm was valued at Rs. 13,500.
(b) Expenses owing to be brought down to Rs. 3,750.
(c) Machinery and Loose Tools to be valued at 10% less than their book value.
(d) Factory premises are to be revalued at Rs. 24,300.
Considering the retirement of Sheela, which of the following is the most likely treatment for the payment due to her as part of the retirement process?
1
Sheela’s dues are immediately paid in full, and the remaining capital balances are adjusted
2
Sheela’s dues are treated as a loan with interest and paid off in installments
3
The entire amount due to Sheela is written off against goodwill
4
Sheela’s dues are paid in installments over a period of time, with interest