Q.No.39 | Chapter 6 – Retirement/Death of a Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

1. Stock to be reduced by 12,000.
2. Advertisement Suspense Account to be written off.
3. Provision for Doubtful Debts to be increased to 6,000.
4. Fixed Assets be appreciated by 10%.
5. Goodwill of the firm, valued at 80,000, and the amount due to the retiring partners be adjusted in X's and Z's Capital Accounts.

Prepare Revaluation Account, Partners' Capital Accounts, and the Balance Sheet to give effect to the above.

The solution of Question 39 Chapter 6 of +2-A: -

Revaluation Account

Particular		Amount	Particular		Amount
To Stock A/c		12000	By Fixed Assets A/c		30,000
To Prov. for Doubtful Debts		2000	(3,00,000 × 10%)
(6,000 – 4,000)
To Profit transferred to
X's Capital A/c	6000
Y's Capital A/c	6000
Z's Capital A/c	4000	16000
		30000			30000

 

Partners’ Capital Account

Part.	X	Y	Z	Part.	X	Y	Z
To Profit and Loss A/c	1500	1500	1000	By Balance B/d	1,00,000	60,000	50,000
To Advertise Suspense A/c	6000	6000	4000	By General Reserve A/c	30,000	30,000	20000
To Y’s Capital A/c	18000	-	12000	By Revaluation A/c	6000	6000	4000
To Y's Loan A/c		1,58,500		By X's Capital A/c	-	18000	-
To Balance c/d	1,10,500	-	57,000	By Z's Capital A/c	-	12000	-
	1,36,000	1,26,000	74,000		1,36,000	1,26,000	74,000

Note: - General Reserve A/c, Profit and Loss A/c, and Advertise Suspense A/c all are distributed in the old ratio.

Balance Sheet

Liabilities		Amount	Assets		Amount
Sundry Creditors		2,50,000	Cash at Bank		50000
X’s Loan		50,000	Bills Receivable		60000
Y’s Loan		1,58,500	Debtors	80,000
			Less: Prov. For D/D	6,000	74,000
			Stock		1,12,000
Capital A/cs			(1,24,000 – 12,000)
X's Capital	1,10,500		Fixed Assets		3,30,000
Z's Capital	57,000	1,67,500	(3,00,000 + 30,000)
		6,26,000			6,26,000

 

Y’s Loan Account

Liabilities		Amount	Assets		Amount
			By Balance b/d		40000
			Y’s Capital A/c		1,18,500
To Balance c/d		1,58,500
		1,58,500			1,58,500

Working Note:-

Calculation of Gaining Ratio

Old Ratio of X, Y, and Z = 3:3:2
Y retires from the firm.

Gaining Ratio of X and Z = 3:2 (Given)

Adjustment of Goodwill

Goodwill of the firm = Rs 80,000

Y's Share of Goodwill	=	Firm's Goodwill	X	B's share
	=	80,000	X	3
				8
	=	Rs 30,000

 

X's Share of Goodwill	=	Y's Goodwill	X	Gaining share of X
	=	30,000	X	3
				5
	=	Rs 18,000

 

Z's Share of Goodwill	=	Y's Goodwill	X	Gaining share of Z
	=	30,000	X	2
				5
	=	Rs 12,000

 

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
• Chapter No. 3 – Goodwill: Nature and Valuation
• Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 – Admission of a Partner
• Chapter No. 6 – Retirement/Death of a Partner
• Chapter No. 7 – Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 8 – Company Accounts –  Accounting for Share Capital
• Chapter No. 9 – Company Accounts – Issue of Debentures
• Chapter No. 10 – Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 – Financial Statements of a Company
• Chapter No. 2 – Financial Statement Analysis 
• Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
• Chapter No. 4 – Accounting Ratios
• Chapter No. 5 – Cash Flow Statement

 

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