T.S. Grewal Class 12 Chapter 5 Q.53 - Retirement of a Partner

Question 53

Meghna, Mehak and Mandeep were partners sharing profits equally. Their Balance Sheet as at 31st March, 2023 showed Creditors ₹28,000, General Reserve ₹7,500, Capitals – Meghna ₹20,000, Mehak ₹14,500, Mandeep ₹10,000; Cash ₹27,000, Debtors ₹20,000, Stock ₹28,000, Furniture ₹5,000. Mehak retired on this date under the following terms: (i) Stock and Furniture to be reduced by 5% and 10% respectively. (ii) Provision for doubtful debts to be created at 10% on Debtors. (iii) Goodwill was valued at ₹12,000. (iv) Creditors of ₹8,000 were settled at ₹7,100. (v) Mehak was paid off, the entire sum payable to her being brought in by Meghna and Mandeep in such a way that their capitals are in their new profit-sharing ratio and a balance of ₹25,000 is maintained in the Cash Account. Prepare the Revaluation Account and Partners’ Capital Accounts. (CBSE Sample Question Paper 2025)

Solution

REVALUATION ACCOUNT

Particulars	₹	Particulars	₹
To Stock A/c	1,400	By Creditors A/c	900
To Furniture A/c	500	By Loss transferred to:
To Provision for Doubtful Debts A/c	2,000	Meghna’s Capital A/c 1,000
		Mehak’s Capital A/c 1,000
		Mandeep’s Capital A/c 1,000	3,000
Total	3,900	Total	3,900

PARTNERS’ CAPITAL ACCOUNTS

Particulars	Meghna	Mehak	Mandeep	Particulars	Meghna	Mehak	Mandeep
To Revaluation A/c (Loss)	1,000	1,000	1,000	By Balance b/d	20,000	14,500	10,000
To Mehak’s Capital A/c (Goodwill)	2,000	–	2,000	By General Reserve A/c	2,500	2,500	2,500
To Cash A/c	–	20,000	–	By Meghna’s Capital A/c	–	2,000	–
To Balance c/d	27,050	–	27,050	By Mandeep’s Capital A/c	–	2,000	–
				By Cash A/c	7,550	–	17,550
Total	30,050	21,000	30,050	Total	30,050	21,000	30,050

Working Notes: Mehak’s share of goodwill = 12,000 × 1/3 = ₹4,000, borne equally by Meghna and Mandeep (₹2,000 each). Shortage of cash = Amount payable to Mehak – Existing Cash (after paying reduced creditors) + Minimum cash required = 20,000 – (27,000 – 7,100) + 25,000 = ₹25,100. Total new firm capital = 19,500 (Meghna) + 9,500 (Mandeep) + 25,100 = ₹54,100, split equally: ₹27,050 each — Meghna brings in ₹7,550, Mandeep brings in ₹17,550.