The Balance Sheet of Mr. Mama, Kaka and Mr. Baba who shared profit and losses as 4:3:3 respectively. Practical Problems | Q 1 | Page 183 Retirement of Partner

Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board 


Chapter 4 Reconstitution of Partnership (Retirement of Partner) Practical Problems [Pages 183 - 186]


Practical Problems | Q 1 | Page 183


The Balance Sheet of Mr. Mama, Kaka and Mr. Baba who shared profit and losses as 4:3:3 respectively.


Balance Sheet as on 31 st March 2018

Liabilities

Amount 

Amount 

Assets

Amount 

Amount 

Suppliers


7,000

Cash


4,500

Loan


5,000

Sundry Debtors

5,000


General Reserve


6,250

Less: R:D:D

500

4,500

Capital Account:



Live Stock


12,500

Mama


20,000

Motor Car


4,000

Kaka


15,000

Furniture


17,500

Baba


12,250

Plant


22,500



65,500



65,500

Kaka retires on 1st April 2018 on the following terms.

1. The share of Kaka in Goodwill of the firm is valued at  2,700

2. Furniture to be depreciated by 10% and Motor Car by 12.5%

3. Live Stock to be appreciated by 10% and Plant by 20%

4. A provision of  2,000 to be made for a claim of compensation.

5. R.D.D. is no longer necessary.

6. The amount payable to Kaka should be transferred to his Loan A/c


Solution: 

Dr

In the books of Partnership Firm Profit and Loss Adjustments Account

Cr

Particulars

Amount ()

Particulars

Amount ()

To Furniture A/c

1,750

By Live Stock A/c

1,250

To Motor Car A/c

500

By Plant A/c

4,500

To Provision for Claim A/c

2,000

By R.D.D. A/c

500

To Partners’ Capital A/cs: Profit




Mama

800




Kaka

600




Baba

600

2000




6,250


6,250

 

Dr

Balance Sheet as on 1st April 2018

Cr

Liabilities

Amount ()

Amount ()

Assets

Amount ()

Amount ()

Partners’ Capital A/cs :



Furniture

17,500


Mama

23,300


Less: Depreciation

1,750

15,750

Baba

14,725

38,025

Motor Car

4,000


Kaka’s Loan A/c


20,175

Less: Depreciation

500

3,500

Suppliers


7,000

Sundry Debtors


5,000

Loan


5,000

Live Stock

12,500


Provision for Claim


2,000

Add: Appreciation

1,250

13,750




Plant

22,500





Add: Appreciation

4,500

27,000




Cash


4,500




Goodwill


2,700



72,200



72,200

 

Dr

Partners’ Capital Accounts

Cr

Particulars

Mama ()

Kaka ()

Baba ()

Particulars

Mama ()

Kaka ()

Baba ()

To Loan A/c


20,175


By Balance b/d

20,000

15,000

12,250

To Balance c/d

23,300


14,725

By General reserve A/c

2,500

1,875

1,875





By Profit and Loss Adjustment A/c (Profit)

800

600

600





By Goodwill A/c


2,700



23,300

20,175

14,725


23,300

20,175

14,725


Working Notes :

(1) R.D.D. is no longer require means it is a gain for firm.

(2) A provision of  2,000 to be made for a claim of compensation,  2,000 is recorded on debit side of Profit and Loss Adjustments A/c and then on liability side of Balance Sheet.

(3) Total payable amount to Kaka  20,175 is recorded as Kaka’s Loan A/c.

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