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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 3. Their Balance Sheet as at 31st March, 2025 showed Creditors ₹7,000, Bills Payable ₹3,000, Reserves ₹20,000, Capitals – A ₹32,000, B ₹24,000, C ₹20,000; Land and Building ₹36,000, Plant and Machinery ₹28,000, Computer Printer ₹8,000, Stock ₹20,000, Sundry Debtors ₹14,000 less Provision ₹2,000, Bank ₹2,000. On 1st April, 2025, B retired on the following terms: (a) Goodwill of the firm is to be valued at ₹14,000. (b) Stock and Land and Building are to be appreciated by 10%. (c) Plant and Machinery and Computer Printer are to be reduced by 10%. (d) Sundry Debtors are considered to be good, so the provision is no longer required. (e) An outstanding salary liability of ₹2,000, not provided for, is to be recorded. (f) The amount payable to B is to be transferred to his Loan Account. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of A and C after B’s retirement.
REVALUATION ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Plant and Machinery A/c | 2,800 | By Stock A/c | 2,000 |
| To Computer Printer A/c | 800 | By Land and Building A/c | 3,600 |
| To Outstanding Salary A/c | 2,000 | By Provision for Doubtful Debts A/c | 2,000 |
| To Profit transferred to: | |||
| A’s Capital A/c 800 | |||
| B’s Capital A/c 600 | |||
| C’s Capital A/c 600 | 2,000 | ||
| Total | 7,600 | Total | 7,600 |
PARTNERS’ CAPITAL ACCOUNTS
| Particulars | A | B | C | Particulars | A | B | C |
|---|---|---|---|---|---|---|---|
| To B’s Capital A/c | 2,400 | – | 1,800 | By Balance b/d | 32,000 | 24,000 | 20,000 |
| To B’s Loan A/c | – | 34,800 | – | By Reserves A/c | 8,000 | 6,000 | 6,000 |
| To Balance c/d | 38,400 | – | 24,800 | By Revaluation A/c | 800 | 600 | 600 |
| By A’s & C’s Capital A/cs | – | 4,200 | – | ||||
| Total | 40,800 | 34,800 | 26,600 | Total | 40,800 | 34,800 | 26,600 |
BALANCE SHEET as at 1st April, 2025 (after B’s Retirement)
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 7,000 | Land and Building | 39,600 |
| Bills Payable | 3,000 | Plant and Machinery | 25,200 |
| Outstanding Salary | 2,000 | Computer Printer | 7,200 |
| B’s Loan A/c | 34,800 | Stock | 22,000 |
| Capitals: A 38,400; C 24,800 | 63,200 | Sundry Debtors | 14,000 |
| Bank | 2,000 | ||
| Total | 1,10,000 | Total | 1,10,000 |
Working Note (Goodwill): Gaining ratio A : C = 4 : 3 (old ratio, since B retires). B’s share of goodwill = 14,000 × 3/10 = ₹4,200; A’s share = 4,200 × 4/7 = ₹2,400; C’s share = 4,200 × 3/7 = ₹1,800.
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.36 - 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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