Extracted text: P,Q and R were carrying on a business in partnership, sharing profits and losses in the ratio of 5:3:2 respectively. The firm earned a profit of $ 3,60,000 for the accounting year ended 31* March, 2014 on which date the firm's Balance Sheet stood as follows: BALANCE SHEET as on 31st March, 2014 Liabilities $ Assets P's Capital Q's Capital R's Capital Creditors Outstanding Expenses 7,00,000 Freehold Land and Building 5,70,000 Machinery 4,30,000| Furniture & Fixtures 79,400 | Stock 4,900 Debtors 8,00,000 3,50,000 1,02.000 2,98,800 1,60,000 73,500 Cash at Bank 17,84,300 17,84,300 P died on 31st August, 2014. According to firm's partnership deed, in case of death of a partner: са (i) (ii) Assets and Liabilities have to be revalued by an independent valuer. Goodwill is to be calculated at two years' purchase of average profits for the last three completed accounting years and the deceased Partner's Capital Account is to be credited with his share of goodwill. (iii) The share of the deceased partner in the profits for the period between end of the previous accounting year and the date of death is to be calculated on the basis of the previous accounting year's profits. Post death of P, Q and R will share profit in the ratio of 3: 2. Profits for the accounting years 2011-2012 and 2012-13 were as follows : For the year ended 31st March, 2012 2,90,000 For the year ended 31st march, 2013 3,40,000 Drawings by P from 1st April 2014 to be date of his death totalled $ 46,000. On revaluation, Freehold Land and Building was appreciated by $ 1,00,000; Machinery was depreciated by $ 10,000 and a Provision for Bad Debts was created @ 5% on Debtors as on 31st March 2014. P's sole heir was given $ 5,00,000 immediately and the balance along with interest @ 12% per annum was paid to him on 31st March, 2015, Prepare Revaluation Account, P's Capital Account and P's Heir Account, giving important working notes.