Rohan, Rohit, and Sachin are partners in a firm sharing profit and losses in the proportion 3:1:1 respectively. Their balance sheet as on 31st March 2018 is as shown below Practical Problems | Q 4 | Page 185 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 4 | Page 185


Rohan, Rohit, and Sachin are partners in a firm sharing profit and losses in the proportion 3:1:1 respectively. Their balance sheet as on 31st March 2018 is as shown below


Balance Sheet as on 31st March 2018

Liabilities

Amount 

Assets

Amount 

Creditors

40,000

Bank

12,500

General Reserve

50,000

Debtors

60,000

Bills payable

25,000

Live Stock

50,000

Capital Accounts :


Building

75,000

Rohan

1,25,000

Plant and Machinery

35,000

Rohit

1,00,000

Motor Truck

1,00,000

Sachin

50,000

Goodwill

57,500


3,90,000


3,90,000

On 1st April 2018, Sachin retired and the following adjustments have been agreed upon.


1. Goodwill was revalued at  50,000


2. Assets and Liabilities were revalued as follows. Debtors  50,000, Live Stock,  45,000; Building  1,25000, Plant and Machinery  30,000, Motor Truck  95,000 and Creditors  30,000


3. Rohan and Rohit contributed additional capital through Net Banking of  50,000 and  25,000 respectively.


4. Balance of Sachin’s Capital Account is transferred to his Loan Account


Give Journal entries in the books of new firm.


Solution: 


Journal entries in the books of Partnership Firm

Date

Particulars

L.F

Debit ()

Credit ()

2018 April 1

General reserve A/c Dr.


50,000


To Rohan's Capital A/c



30,000

To Rohit's Capital A/c



10,000

To Sachin’s Capital A/c



10,000

(Being General reserve distributed among partners)




2018 April 1

Revaluation A/c Dr.


32,500


To Debtors A/c



10,000

To Live Stock A/c



5,000

To Plant and Machinery A/c



5,000

To Motor Truck A/c



5,000

To Goodwill A/c



7,500

(Being assets depreciated)




2018 April 1

Building A/c Dr.


50,000


Creditors A/c Dr.


10,000


To revaluation A/c



60,000

(Being Building appreciated and Creditor's amount is payable less)




2018 April 1

Revaluation A/c Dr


27,500


To Rohan's Capital A/c



16,500

To Rohit's Capital A/c



5,500

To Sachin’s Capital A/c



5,500

(Being Profit on revaluation distributed and transferred to Capital accounts)




2018 April 1

Bank A/c Dr.


75,000


To Rohan's Capital A/c



50,000

To Rohit's Capital A/c



25,000

(Being additional capital brought by partners)




2018 April 1

Sachin’s Capital A/c Dr.


65,500


To Sachin’s Loan A/c



65,500

(Being balance of Sachin’s Capital A/c transferred to Sachin’s Loan A/c)







3,10,500

3,10,500

Working Notes :


(1) Calculation of Profit on revaluation of Assets and Liabilities.


Dr

Revaluation Account

Cr

Particulars

Amount ()

Particulars

Amount ()

To Debtors A/c

10,000

By Building A/c

50,000

To Live Stock A/c

5,000

By Creditors A/c

10,000

To Plant and Machinery A/c

5,000



To Motor Truck A/c

5,000



To Goodwill A/c

7,500



To Partners’ Capital A/cs: Profit




Rohan

16,500




Rohit

5,500




Sachin

55,500

27,500




60,000


60,000

 

Dr

Partners’ Capital Accounts

Cr

Particulars

Rohan ()

Rohit ()

Sachin ()

Particulars

Rohan ()

Rohit ()

Sachin ()

To Loan A/c

-

-

65,500

By Balance b/d

1,25,000

1,00,000

50,000

To Balance c/d

2,21,500

1,40,500

-

By General reserve A/c

30,000

10,000

10,000





By revaluation A/c (Profit)

16,500

5,500

5,500





By Bank A/c

50,000

25,000

-


2,21,500

1,40,500

65,500


2,21,500

1,40,500

65,500


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