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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Suraj, Pawan and Kamal are partners sharing profits and losses in the ratio of 3 : 2 : 1. Their Balance Sheet as at 31st March, 2024 showed Creditors ₹46,000, General Reserve ₹12,000, Capitals – Suraj ₹40,000, Pawan ₹40,000, Kamal ₹30,000; Cash in Hand ₹18,000, Debtors ₹25,000 less Provision ₹3,000, Stock ₹18,000, Furniture ₹30,000, Machinery ₹70,000, Goodwill ₹10,000. Pawan retired on 1st April, 2024 on the following terms: (a) Provision for Doubtful Debts to be raised by ₹1,000. (b) Stock to be reduced by 10% and Furniture by 5%. (c) An outstanding claim of damages of ₹1,100 to be provided for. (d) Creditors to be written back by ₹6,000. (e) Goodwill of the firm valued at ₹22,000. (f) Pawan to be paid in full with the cash brought in by Suraj and Kamal in such a manner that their capitals are in proportion to their profit-sharing ratio and Cash in Hand remains at ₹10,000. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of Suraj and Kamal.
REVALUATION ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Provision for Doubtful Debts A/c | 1,000 | By Creditors A/c | 6,000 |
| To Stock A/c | 1,800 | ||
| To Furniture A/c | 1,500 | ||
| To Outstanding Claim of Damages A/c | 1,100 | ||
| To Profit transferred to: | |||
| Suraj’s Capital A/c 300 | |||
| Pawan’s Capital A/c 200 | |||
| Kamal’s Capital A/c 100 | 600 | ||
| Total | 6,000 | Total | 6,000 |
PARTNERS’ CAPITAL ACCOUNTS
| Particulars | Suraj | Pawan | Kamal | Particulars | Suraj | Pawan | Kamal |
|---|---|---|---|---|---|---|---|
| To Goodwill A/c | 5,000 | 3,333 | 1,667 | By Balance b/d | 40,000 | 40,000 | 30,000 |
| To Pawan’s Capital A/c | 5,500 | – | 1,833 | By Revaluation A/c | 300 | 200 | 100 |
| To Balance c/d | 35,800 | 48,200 | 28,600 | By General Reserve A/c | 6,000 | 4,000 | 2,000 |
| By Suraj’s Capital A/c | – | 5,500 | – | ||||
| By Kamal’s Capital A/c | – | 1,833 | – | ||||
| Total | 46,300 | 51,533 | 32,100 | Total | 46,300 | 51,533 | 32,100 |
| To Cash A/c | – | 48,200 | 2,450 | By Balance b/d | 35,800 | 48,200 | 28,600 |
| To Balance c/d | 78,450 | 26,150 | By Cash A/c | 42,650 | |||
| Total | 78,450 | 48,200 | 28,600 | Total | 78,450 | 48,200 | 28,600 |
BALANCE SHEET as at 1st April, 2024 (after Pawan’s Retirement)
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 40,000 | Cash in Hand | 10,000 |
| Outstanding Claim of Damages | 1,100 | Debtors 25,000 less Provision 4,000 | 21,000 |
| Capitals: Suraj 78,450; Kamal 26,150 | 1,04,600 | Stock | 16,200 |
| Furniture | 28,500 | ||
| Machinery | 70,000 | ||
| Total | 1,45,700 | Total | 1,45,700 |
Working Notes: Existing goodwill of ₹10,000 written off first in old ratio 3 : 2 : 1. New goodwill (₹22,000): Pawan’s share = 22,000 × 2/6 = ₹7,333, borne by Suraj and Kamal in their new ratio 3 : 1 (₹5,500 and ₹1,833). Combined new capital = 35,800 + 28,600 (stage-1 balances) + 40,200 (net cash brought in, being ₹48,200 paid to Pawan plus ₹10,000 closing cash less ₹18,000 opening cash) = ₹1,04,600, split 3 : 1: Suraj ₹78,450 (brings in ₹42,650), Kamal ₹26,150 (withdraws ₹2,450).
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.54 - 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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