Precautions while preparing Balance sheet of the new firm after retirement of a partner

Capitals of the remaining partners should be as per new profit sharing ratio.

All the Accumulated profits/losses should be shared in old profit sharing ratio or as instructed in the question, so, should not be taken to the new balance sheet, if already distributed.

All the assets/liabilities revalued should be shown at revised values in the new balance sheet, including cash/bank balance.

Retiring partner’s loan account must be shown in the liabilities side of the balance sheet of the new firm.

Death of Partner

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