Question 38 Chapter 6 of +2 Part-1 - USHA Publication 12 Class Part - 1

Question 38 Chapter 6 of +2-Part-1

38 (Adjustment of Goodwill without raising Goodwill A/c Partner Loan A/c Journal) A B and C are carrying an business in partnership sharing profits and losses in the ratio of 3 :2: 1 respectively On 31st December, 2018, the Balance Sheet of the firm stood as follows:

Liabilities	Rs.	Assets	Rs.
Creditors	13,590	Cash	5,900
Capitals A	15,000	Debtors	8,000
B	10,000	Stock	11,690
C	10,000	Building	23,000
	48,590		48,590

B retired on the following terms:
(i)Building appreciated by Rs.7,000.
(ii) Provision for bad debts is to make at 5% on debtors.
(iii) Goodwill of the firm valued at Rs. 9,000 and adjustment in this respect be made without raising goodwill account..
(iv) Rs. 5,000 to be paid to B immediately and the balance due to him be treated as loan carrying interest @ 6% per annum.
Pass journal entries to record the above-mentioned transactions and show the Balance Sheet of the firm as it would appear immediately after B’s retirement.

The solution of Question 38 Chapter 6 of +2 Part-1: -

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Journal

Date	Particulars		L.F.	Debit	Credit
	Building A/c	Dr.		7,000
	To Revaluation A/c				7,000
	(Being appreciated value of Building recorded in the books)
	Revaluation A/c	Dr.		400
	To provision for doubtful debts A/c				400
	(Being Provision for doubtful debts created on Debtors)
	Revaluation A/c	Dr.		6,600
	To A’s capital A/c				3,300
	To B’s capital A/c				2,200
	To C’s capital A/c				1,100
	(Being revaluation on profit )
	A’s capital A/c	Dr.		2,250
	C’s capital A/c	Dr.		750
	To B’s capital A/c				3,000
	(Being adjustment of goodwill )
	B’s capital A/c	Dr.		5,000
	To cash A/c				5,000
	(Being part payment to B)
	B’s capital A/c	Dr.		10,200
	To B’s loan A/c				10,200
	(Being settlement of B’s A/c)

Partners’ Capital Account

Particulars	A	B	C	Particulars	A	B	C
To B’s capital A/c	2,250		750	By Balance b/d	15,000	10,000	10,000
To Cash		5,000		By Revaluation A/c	3,300	2,200	1,100
To B’s loan A/c		10,200		By A’s capital A/c		2,250
				By C’s capital A/c		750
To Balance c/d	16,050	-	10,350
	18,300	15,200	11,100		18,300	15,200	11,100

Balance Sheet

Liabilities		Amount	Assets		Amount
Creditors		13,590	Cash		900
B’s loan A/c		10,200	Debtors	8,000
Capital			Less Provision	400	7,600
A	16,050		Stock		11,690
C	10,350	26,400	Building		30,000
		50,190			50,190

Comment if you have any questions.