T.S. Grewal Class 12 Chapter 5 Q.27 - Retirement of a Partner

Question 27

X, Y and Z are partners sharing profits and losses in the ratio of 3 : 2 : 1. Z retires on 31st March, 2025. On that date the following balances appeared in the books: General Reserve ₹1,80,000; Profit and Loss Account (Dr.) ₹30,000; Workmen Compensation Reserve ₹24,000 (no longer required); Employees’ Provident Fund ₹20,000. Pass necessary Journal entries for the adjustment of these items on Z’s retirement.

Solution

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
2025 Mar 31	General Reserve A/c    Dr.		1,80,000
	Workmen Compensation Reserve A/c    Dr.		24,000
	To X’s Capital A/c			1,02,000
	To Y’s Capital A/c			68,000
	To Z’s Capital A/c			34,000
	(Reserves no longer required distributed in old ratio 3 : 2 : 1)
	X’s Capital A/c    Dr.		15,000
	Y’s Capital A/c    Dr.		10,000
	Z’s Capital A/c    Dr.		5,000
	To Profit and Loss A/c			30,000
	(Debit balance of P&L A/c written off in old ratio 3 : 2 : 1)

Note: Employees’ Provident Fund is an external liability, not an accumulated profit, and is therefore not distributed.