The Balance Sheet of Ram, Shyam, and Ghanshyam sharing profits and losses 3:2:1 respectively. Their position on 31-3-2019 were as follows Practical Problems | Q 2 | Page 184 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 2 | Page 184


The Balance Sheet of Ram, Shyam, and Ghanshyam sharing profits and losses 3:2:1 respectively. Their position on 31-3-2019 were as follows.


Balance Sheet as on 31st March 2019

Liabilities

Amount 

Assets

Amount 

Capitals :


Bank

54,000

Ram

1,20,000

Debtors

90,000

Shyam

90,000

Building

60,000

Ghanshyam

60,000

Investment

1,50,000

Creditors

22,000



Bills payable

12,000



Loan

50,000




3,54,000


3,54,000


Ghanshyam retired on 1st April 2019 on the following terms.


1. Building and Investment to be appreciated by 5% and 10% respectively.


2. Provision for Doubtful Debts to be created at 5% on Debtors.


3. The provision of  3,000 be made in respect of Outstanding Salary.


4. Goodwill of the firm is valued at   90,000 and partners decide that goodwill should be written back.


5. The amount payable to the Retiring partner be transferred to his Loan A/c.


Prepare :


Profit and Loss Adjustment A/c,

Partners Capital A/c,

Balance Sheet of New Firm.


Solution: 


Dr

In the books of Partnership Firm Profit and Loss Adjustment Account

Cr

Particulars

Amount ()

Particulars

Amount ()

To R.D.D. A/c

4,500

By Building A/c

3,000

To Provision for Outstanding Salary A/c

3,000

By Investments A/c

15,000

To Partners’ Capital A/cs: Profit




Ram

5,250




Shyam

3,500




Ghanshyam

1,750

10,500




18,000


18,000

 

Dr

Partners’ Capital Accounts

Cr

Particulars

Ram ()

Shyam ()

Ghanshyam ()

Particulars

Ram ()

Shyam ()

Ghanshyam ()

To Loan A/c

-

-

76,750

By Balanced b/d

1,20,000

90,000

60,000

To Goodwill A/c

9,000

6,000

-

By Profit and Loss Adjustment A/c (Profit)

5,250

3,500

1,750

To Balance c/d

1,16,250

87,500

-

By Goodwill A/c

-

-

15,000


1,25,250

93,500

76,750


1,25,250

93,500

76,750

 

Balance Sheet as on 1st April 2019

Liabilities

Amount ()

Amount ()

Assets

Amount ()

Amount ()

Partners’ Capital A/cs :



Bank


54,000

Ram

1,16,250


Debtors

90,000


Shyam

87,500

2,03,750

Less: R.D.D. (5 %)

4,500

85,500

Ghanshyam’s Loan A/c


76,750

Building

60,000


Creditors


22,000

Add : Appreciation

3,000

63,000

Bills Payable


12,000

Investments

1,50,000


Loan


50,000

Add : Appreciation

15,000

1,65,000

Provision for Outstanding Salary


3,000






3,67,500



3,67,500

Working Notes :

(1) Provision of  3,000 for outstanding salary is recorded on debit side of Profit and Loss Adjustment A/c and then on the Liability side of Balance Sheet.

(2) Goodwill of the firm is valued at  90,000 and share of retiring partner in it is  15,000 (1/6th part) and it is to be written back means it is to be shared by remaining partners in their profit-loss ratio.

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