Question 23 Chapter 6 – Unimax Class 12 Part 1 – 2021
Table of Contents
23. A, B and C are partners, sharing profits and losses in the proportion of 1/2 : 1/3 and 1/6 respectively. The firm’s balance sheet on March 31, 2021 was as follows :
| Liabilities | Amount | Assets | Amount | |
| Sundry Creditors | 19000 | Cash at Bank | 2500 | |
| Bills Payable | 5000 | Debtors | 16000 | |
| Capital | Less : Provision | 500 | 15500 | |
| A | 40000 | Stock | 25000 | |
| B | 30000 | Motor Vans | 8000 | |
| C | 25000 | Plant and Machinery | 35000 | |
| Reserve fund | 12000 | Factory Buildings | 45000 | |
| 131000 | 131000 |
B retires on that date, subject to the following adjustments :
- The goodwill of the firm to be valued at Rs. 18000.
- Plant and Machinery to be depreciated by 10% and motor vans by 15%.
- Stock to be appreciated by 20% and buildings by 10%.
- Provision for doubtful debts to be increased by Rs. 1950.
Prepare the (1) Profit and Loss Adjustment Account; and (2) B’s Capital Account.
The solution of Question 23 Chapter 6 – Unimax Class 12 Part 1: –
Revaluation A/c
| Particulars | Rs. | Particulars | Rs. | |
| To Plant and Machinery | 3500 | By Buildings a/c | 4500 | |
| To Profit on revaluation transferred to capital a/cs | By Stock | 5000 | ||
| A (3/6) | 1425 | |||
| B (2/6) | 950 | |||
| C (1/6) | 475 | 2850 | ||
| To Motor Van | 1200 | |||
| To Provision for doubtful debts | 1950 | |||
| 9,500 | 9,500 |
Capital Accounts
| Particulars | A | B | C | Particulars | A | B | C |
| To B’s Capital a/c | 2250 | 1500 | By Balance b/d | 40000 | 30000 | 25000 | |
| To B’s Loan a/c | 40950 | By A’s Capital a/c | 4500 | ||||
| By C’s Capital a/c | 1500 | ||||||
| To Balance c/d | 42925 | 25975 | By Revaluation a/c (Profit) | 1425 | 950 | 475 | |
| By Reserve | 6000 | 4000 | 2000 | ||||
| 47425 | 40950 | 27475 | 47425 | 40950 | 27475 |
Balance Sheet (After Retirement)
| Liabilities | Rs. | Assets | Rs. | ||
| Sundry Creditors | 19000 | Cash at Bank | 2500 | ||
| Capital Accounts | Debtors | 16000 | |||
| A | 42925 | Less : Provision | 2450 | 13550 | |
| C | 25975 | 68900 | Stock | 30000 | |
| B’s Loan a/c | 40950 | Motor Vans | 6800 | ||
| Bills Payable | 5000 | Plant and Machinery | 31500 | ||
| Factory Building | 49500 | ||||
| 133850 | 133850 |
Working Note:
B’s Share of goodwill = 1/3 X 18000 = Rs. 6000
Entry for adjustment of goodwill
| A’s Capital a/c | Dr. | 4500 | ||
| C’s Capital a/c | Dr. | 1500 | ||
| To B’s Capital a/c | 6000 |
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Retirement of a Partner – Explained with Illustration
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication