T.S. Grewal Class 12 Chapter 5 Q.51 - Retirement of a Partner

Question 51

Balance Sheet of X, Y and Z, who shared profits in the ratio of 5 : 3 : 2, as at 31st March, 2025 showed Sundry Creditors ₹39,750, Employees’ Provident Fund ₹5,250, Workmen Compensation Reserve ₹22,500, Capitals – X ₹1,65,000, Y ₹84,000, Z ₹66,000; Bank (Minimum Balance) ₹15,000, Debtors ₹97,500, Stock ₹82,500, Fixed Assets ₹1,87,500. Y retired on 1st April, 2025 and it was agreed that: (i) Goodwill of the firm is valued at ₹1,12,500 and Y’s share be adjusted into the accounts of X and Z, who will share future profits in the ratio of 3 : 2. (ii) Fixed Assets be appreciated by 20%. (iii) Stock be reduced to ₹75,000. (iv) Y be paid the amount brought in by X and Z so as to make their capitals proportionate to their new profit-sharing ratio. Prepare the Revaluation Account, Capital Accounts of all partners and the Balance Sheet of the new firm.

Solution

REVALUATION ACCOUNT

Particulars	₹	Particulars	₹
To Stock A/c	7,500	By Fixed Assets A/c	37,500
To Profit transferred to:
X’s Capital A/c 15,000
Y’s Capital A/c 9,000
Z’s Capital A/c 6,000	30,000
Total	37,500	Total	37,500

PARTNERS’ CAPITAL ACCOUNTS

Particulars	X	Y	Z	Particulars	X	Y	Z
To Y’s Capital A/c	11,250	–	22,500	By Balance b/d	1,65,000	84,000	66,000
To Balance c/d	1,80,000	–	54,000	By Workmen Compensation Reserve A/c	11,250	6,750	4,500
				By Revaluation A/c	15,000	9,000	6,000
				By X’s Capital A/c	–	11,250	–
				By Z’s Capital A/c	–	22,500	–
Total	1,91,250	1,33,500	76,500	Total	1,91,250	1,33,500	76,500
To Bank A/c		1,33,500		By Balance b/d	1,80,000		54,000
To Balance c/d	2,20,500		1,47,000	By Bank A/c	40,500		93,000
Total	2,20,500	1,33,500	1,47,000	Total	2,20,500	1,33,500	1,47,000

BALANCE SHEET as at 1st April, 2025 (after Y’s Retirement)

Liabilities	₹	Assets	₹
Sundry Creditors	39,750	Bank	15,000
Employees’ Provident Fund	5,250	Debtors	97,500
Capitals: X 2,20,500; Z 1,47,000	3,67,500	Stock	75,000
		Fixed Assets	2,25,000
Total	4,12,500	Total	4,12,500

Working Note: New combined capital = 1,80,000 + 54,000 + 1,33,500 (amount to be paid to Y) = ₹3,67,500. X’s new capital = 3,67,500 × 3/5 = ₹2,20,500 (brings in ₹40,500). Z’s new capital = 3,67,500 × 2/5 = ₹1,47,000 (brings in ₹93,000).