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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Chintan, Ayush and Sudha were partners sharing profits and losses in the ratio of 5 : 3 : 2. On 31st March, 2019, their Balance Sheet showed Capitals – Chintan ₹90,000, Ayush ₹60,000, Sudha ₹40,000; Provident Fund ₹30,000; General Reserve ₹20,000; Creditors ₹10,000; Plant and Machinery ₹90,000, Furniture ₹60,000, Stock ₹30,000, Debtors ₹60,000 less Provision ₹5,000, Cash at Bank ₹15,000. Chintan retired on the above date and it was agreed that: (a) Debtors of ₹5,000 were to be written off as bad debts and a provision of 5% for doubtful debts was to be created on the balance. (b) Goodwill of the firm on Chintan’s retirement was valued at ₹1,00,000, and Chintan’s share of the same was to be adjusted by debiting the Capital Accounts of Ayush and Sudha (no new ratio being specified, in their existing ratio of 3 : 2). (c) Stock was revalued at ₹36,000. (d) Furniture was undervalued by ₹9,000. (e) A liability for Workmen’s Compensation of ₹2,000 was to be created. (f) Chintan was to be paid ₹20,000 by cheque and the balance was to be transferred to his Loan Account. Pass the necessary Journal entries. (CBSE 2020 C)
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Stock A/c Dr. | 6,000 | |||
| Furniture A/c Dr. | 9,000 | |||
| Provision for Doubtful Debts A/c Dr. | 2,250 | |||
| To Revaluation A/c | 17,250 | |||
| (Increase in Stock and Furniture, and decrease in required Provision, credited to Revaluation A/c) | ||||
| Revaluation A/c Dr. | 7,000 | |||
| To Bad Debts A/c | 5,000 | |||
| To Liability for Workmen’s Compensation A/c | 2,000 | |||
| (Bad debts written off and Workmen’s Compensation liability created, debited to Revaluation A/c) | ||||
| Revaluation A/c Dr. | 10,250 | |||
| To Chintan’s Capital A/c | 5,125 | |||
| To Ayush’s Capital A/c | 3,075 | |||
| To Sudha’s Capital A/c | 2,050 | |||
| (Profit on revaluation transferred to Partners’ Capital Accounts in old ratio 5 : 3 : 2) | ||||
| General Reserve A/c Dr. | 20,000 | |||
| To Chintan’s Capital A/c | 10,000 | |||
| To Ayush’s Capital A/c | 6,000 | |||
| To Sudha’s Capital A/c | 4,000 | |||
| (General Reserve distributed in old ratio 5 : 3 : 2) | ||||
| Ayush’s Capital A/c Dr. | 30,000 | |||
| Sudha’s Capital A/c Dr. | 20,000 | |||
| To Chintan’s Capital A/c | 50,000 | |||
| (Chintan’s share of goodwill, ₹1,00,000 × 5/10 = ₹50,000, adjusted through Ayush and Sudha’s capitals in 3 : 2) | ||||
| Chintan’s Capital A/c Dr. | 20,000 | |||
| To Bank A/c | 20,000 | |||
| (Part payment made to Chintan by cheque) | ||||
| Chintan’s Capital A/c Dr. | 1,35,125 | |||
| To Chintan’s Loan A/c | 1,35,125 | |||
| (Balance due to Chintan transferred to his Loan Account) |
Working Note: Chintan’s Capital = 90,000 + 5,125 (Revaluation) + 10,000 (Reserve) + 50,000 (Goodwill) = ₹1,55,125. Less paid by cheque ₹20,000 = ₹1,35,125 transferred to Loan A/c.
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.35 - 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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