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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Ashok, Bhaskar and Chaman are partners in a firm, sharing profits and losses as Ashok 1/3, Bhaskar 1/2 and Chaman 1/6. Their Balance Sheet as at 31st March, 2024 showed Capitals – Ashok ₹3,00,000, Bhaskar ₹4,00,000, Chaman ₹2,50,000; General Reserve ₹2,20,000; Sundry Creditors ₹2,50,000; Loan Payable ₹1,50,000; Building ₹5,00,000, Plant and Machinery ₹4,00,000, Furniture ₹1,00,000, Stock ₹2,50,000, Debtors ₹1,80,000 less Provision ₹5,000, Cash ₹85,000, Advertisement Suspense A/c ₹60,000. Chaman retired on 1st April, 2024 subject to: (a) Goodwill of the firm valued at ₹2,40,000; Chaman’s share of goodwill to be adjusted into the Capital Accounts of Ashok and Bhaskar, who will share future profits in the ratio of 3 : 2. (b) Plant and Machinery to be reduced by 10% and Furniture by 5%. (c) Stock to be increased by 15% and Building by 10%. (d) Provision for Doubtful Debts to be raised to ₹20,000. Prepare the Revaluation Account, Chaman’s Capital Account and the Balance Sheet of the firm after Chaman’s retirement.
REVALUATION ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Plant and Machinery A/c | 40,000 | By Stock A/c | 37,500 |
| To Furniture A/c | 5,000 | By Building A/c | 50,000 |
| To Provision for Doubtful Debts A/c | 15,000 | ||
| To Profit transferred to: | |||
| Ashok’s Capital A/c 9,167 | |||
| Bhaskar’s Capital A/c 13,750 | |||
| Chaman’s Capital A/c 4,583 | 27,500 | ||
| Total | 87,500 | Total | 87,500 |
JOURNAL (Goodwill)
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Ashok’s Capital A/c Dr. | 64,000 | |||
| To Bhaskar’s Capital A/c | 24,000 | |||
| To Chaman’s Capital A/c | 40,000 | |||
| (Ashok, the sole gaining partner, compensates Bhaskar for his sacrifice and Chaman for his share of goodwill) |
CHAMAN’S CAPITAL ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Advertisement Suspense A/c | 10,000 | By Balance b/d | 2,50,000 |
| To Chaman’s Loan A/c | 3,21,250 | By General Reserve A/c | 36,667 |
| By Revaluation A/c | 4,583 | ||
| By Ashok’s Capital A/c | 40,000 | ||
| Total | 3,31,250 | Total | 3,31,250 |
BALANCE SHEET as at 1st April, 2024 (after Chaman’s Retirement)
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Sundry Creditors | 2,50,000 | Building | 5,50,000 |
| Loan Payable | 1,50,000 | Plant and Machinery | 3,60,000 |
| Chaman’s Loan A/c | 3,21,250 | Furniture | 95,000 |
| Capitals: Ashok 2,98,500; Bhaskar 5,17,750 | 8,16,250 | Stock | 2,87,500 |
| Debtors 1,80,000 less Provision 20,000 | 1,60,000 | ||
| Cash | 85,000 | ||
| Total | 15,37,500 | Total | 15,37,500 |
Working Note: Old ratio 2 : 3 : 1 (sixths). New ratio Ashok : Bhaskar = 3 : 2. Gain/(Sacrifice): Ashok = 3/5 – 2/6 = 8/30 (Gain); Bhaskar = 2/5 – 3/6 = –3/30 (Sacrifice). Chaman’s share of goodwill = 2,40,000 × 1/6 = ₹40,000; Bhaskar’s compensation for sacrifice = 2,40,000 × 3/30 = ₹24,000 — both borne entirely by Ashok (₹64,000).
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 5 Q.34 - Retirement of a Partner", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 5 - Retirement of a Partner.
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