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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Lisa, Monika and Nisha were partners sharing profits and losses in the ratio of 2 : 2 : 1. On 31st March, 2025, their Balance Sheet showed Trade Creditors ₹1,60,000, Bills Payable ₹2,44,000, Employees’ Provident Fund ₹76,000, Capitals – Lisa ₹14,00,000, Monika ₹14,00,000, Nisha ₹3,60,000; Land and Building ₹10,00,000, Machinery ₹12,00,000, Stock ₹10,00,000, Sundry Debtors ₹4,00,000, Bank ₹40,000. Monika retired and it was agreed that: (i) Land and Building be appreciated by ₹2,40,000 and Machinery depreciated by 10%. (ii) 50% of the Stock was taken over by Monika at book value. (iii) A Provision for Doubtful Debts of 5% on Debtors was created. (iv) Goodwill of the firm was valued at ₹3,00,000 and Monika’s share of goodwill was adjusted in the accounts of Lisa and Nisha. (v) The total capital of the new firm was fixed at ₹27,00,000 in the new profit-sharing ratio of Lisa and Nisha, the adjustment being made through Current Accounts. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.
REVALUATION ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Provision for Doubtful Debts A/c | 20,000 | By Land and Building A/c | 2,40,000 |
| To Machinery A/c | 1,20,000 | ||
| To Profit transferred to: | |||
| Lisa’s Capital A/c 40,000 | |||
| Monika’s Capital A/c 40,000 | |||
| Nisha’s Capital A/c 20,000 | 1,00,000 | ||
| Total | 2,40,000 | Total | 2,40,000 |
PARTNERS’ CAPITAL ACCOUNTS
| Particulars | Lisa | Monika | Nisha | Particulars | Lisa | Monika | Nisha |
|---|---|---|---|---|---|---|---|
| To Monika’s Capital A/c | 80,000 | – | 40,000 | By Balance b/d | 14,00,000 | 14,00,000 | 3,60,000 |
| To Stock A/c | – | 5,00,000 | – | By Lisa’s Capital A/c | – | 80,000 | – |
| To Monika’s Loan A/c | – | 10,60,000 | – | By Nisha’s Capital A/c | – | 40,000 | – |
| To Balance c/d | 13,60,000 | – | 3,40,000 | By Revaluation A/c | 40,000 | 40,000 | 20,000 |
| Total | 14,40,000 | 15,60,000 | 3,80,000 | Total | 14,40,000 | 15,60,000 | 3,80,000 |
| To Balance c/d | 18,00,000 | 9,00,000 | By Balance b/d | 13,60,000 | 3,40,000 | ||
| By Current A/c | 4,40,000 | 5,60,000 | |||||
| Total | 18,00,000 | 9,00,000 | Total | 18,00,000 | 9,00,000 |
BALANCE SHEET as at 1st April, 2025 (after Monika’s Retirement)
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Trade Creditors | 1,60,000 | Land and Building | 12,40,000 |
| Bills Payable | 2,44,000 | Machinery | 10,80,000 |
| Employees’ Provident Fund | 76,000 | Stock | 5,00,000 |
| Monika’s Loan A/c | 10,60,000 | Sundry Debtors 4,00,000 less Provision 20,000 | 3,80,000 |
| Capitals: Lisa 18,00,000; Nisha 9,00,000 | 27,00,000 | Bank | 40,000 |
| Lisa’s Current A/c | 4,40,000 | ||
| Nisha’s Current A/c | 5,60,000 | ||
| Total | 42,40,000 | Total | 42,40,000 |
Working Notes: Gaining ratio (Lisa : Nisha) = 2 : 1. Monika’s share of goodwill = 3,00,000 × 2/5 = ₹1,20,000, borne by Lisa (₹80,000) and Nisha (₹40,000). New ratio Lisa : Nisha = 2 : 1, so Lisa’s new capital = 27,00,000 × 2/3 = ₹18,00,000 and Nisha’s = 27,00,000 × 1/3 = ₹9,00,000; the shortfall in each partner’s capital is met by a debit to their Current Account.
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.43 - 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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