Loading Tutorstips...
✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
X, Y and Z were partners sharing profits in proportion to their capitals: X ₹90,000, Y ₹60,000, Z ₹30,000. Their Balance Sheet as at 31st March, 2018 showed Sundry Creditors ₹16,600, Workmen’s Compensation Fund ₹9,000, General Reserve ₹6,000; Cash ₹15,000, Debtors ₹21,000 less Provision ₹1,400, Stock ₹19,000, Machinery ₹58,000, Building ₹1,00,000. Y retired owing to ill health, and it was agreed that: (a) Provision for Doubtful Debts be increased to 10% of Debtors. (b) Goodwill of the firm be valued at ₹36,000 and adjusted into the Capital Accounts of X and Z, who will share profits in future in the ratio of 3 : 1. (c) ₹2,500 included in Sundry Creditors for an outstanding legal claim will not arise. (d) The total capital of the new firm will be ₹1,20,000 in the new profit-sharing ratio, actual cash being brought in or paid off. (e) Y to be paid ₹9,000 immediately and the balance transferred to his Loan Account. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm. (CBSE Sample Paper 2019)
REVALUATION ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Provision for Doubtful Debts A/c | 700 | By Sundry Creditors A/c | 2,500 |
| To Profit transferred to: | |||
| X’s Capital A/c 900 | |||
| Y’s Capital A/c 600 | |||
| Z’s Capital A/c 300 | 1,800 | ||
| Total | 2,500 | Total | 2,500 |
PARTNERS’ CAPITAL ACCOUNTS
| Particulars | X | Y | Z | Particulars | X | Y | Z |
|---|---|---|---|---|---|---|---|
| To Y’s Capital A/c | 9,000 | – | 3,000 | By Balance b/d | 90,000 | 60,000 | 30,000 |
| To Cash A/c | – | 9,000 | – | By X’s Capital A/c | – | 9,000 | – |
| To Y’s Loan A/c | – | 68,600 | – | By Z’s Capital A/c | – | 3,000 | – |
| To Balance c/d | 89,400 | – | 29,800 | By Workmen’s Compensation Fund | 4,500 | 3,000 | 1,500 |
| By General Reserve A/c | 3,000 | 2,000 | 1,000 | ||||
| By Revaluation A/c | 900 | 600 | 300 | ||||
| Total | 98,400 | 77,600 | 32,800 | Total | 98,400 | 77,600 | 32,800 |
| To Balance c/d | 90,000 | 30,000 | By Balance b/d | 89,400 | 29,800 | ||
| By Cash A/c | 600 | 200 | |||||
| Total | 90,000 | 30,000 | Total | 90,000 | 30,000 |
BALANCE SHEET as at 1st April, 2018 (after Y’s Retirement)
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Sundry Creditors | 14,100 | Cash (15,000 – 9,000 + 600 + 200) | 6,800 |
| Y’s Loan A/c | 68,600 | Debtors 21,000 less Provision 2,100 | 18,900 |
| Capitals: X 90,000; Z 30,000 | 1,20,000 | Stock | 19,000 |
| Machinery | 58,000 | ||
| Building | 1,00,000 | ||
| Total | 2,02,700 | Total | 2,02,700 |
Working Notes: Old ratio X : Y : Z = 3 : 2 : 1; new ratio X : Z = 3 : 1; gaining ratio = 3 : 1. Y’s share of goodwill = 36,000 × 2/6 = ₹12,000, borne by X (₹9,000) and Z (₹3,000). New capitals: X = 1,20,000 × 3/4 = ₹90,000; Z = 1,20,000 × 1/4 = ₹30,000.
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.45 - Retirement of a Partner", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 5 - Retirement of a Partner.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
You can take our custom-built interactive practice quiz directly on this page to test your understanding of "T.S. Grewal Class 12 Chapter 5 Q.45 - Retirement of a Partner" instantly.