Question 24 Chapter 6 - Unimax Class 12 Part 1

Question 24 Chapter 6 – Unimax Class 12 Part 1 – 2021

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The solution of Question 24 Chapter 6 – Unimax Class 12 Part 1: –

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

24. A, B and C carry on business sharing profits and losses in proportions 1/2, 1/3 and 1/6 respectively. The Balance Sheet of the firm as on 31st March, 2021 was as follows :

Liabilities	Amount	Assets		Amount
Sundry Creditors	12600	Cash at Bank		4100
Provident Fund	3000	Debtors	30000
Capital		Less : Provision	1000	29000
A	40000	Stock		25000
B	36500	Investments		10000
C	20000	Patents		5000
Reserve fund	9000	Plant and Machinery		48000

	121000			121000

C retired on the above date on the following terms :

Goodwill of firm was valued at Rs. 27000.
Value of patents was to be reduced by 20% and that of Plant and Machinery by 10%.
Provision for doubtful debts was to be raised by 6%.
C took over investment at a value of Rs. 15800.
Liability on account of provident fund was only Rs. 2500.

Show the necessary journal entries for treatment of goodwill, prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet of A and B after C’s retirement.

The solution of Question 24 Chapter 6 – Unimax Class 12 Part 1: –

Journal

Date	Particulars		Debit	Credit
	A’s Capital a/c	Dr.	4,000
	C’s Capital a/c	Dr.	6,000
	To B’s Capital a/c			10,000
	(Being retiring partner C compensated by A and B in gaining ratio)

Revaluation A/c

Particulars	Rs.	Particulars		Rs.
To Patents a/c	1,000	By Investment a/c		5,800
To Plant and Machinery a/c	4,800	By Provident Fund		500
To Provision for doubtful debts	800	By Loss on revaluation
		A	150
		B	100
		C	50	300

	6,600			6,600

Capital Accounts

Particulars	A	B	C	Particulars	A	B	C
To C’s Capital a/c	2,700	1,800		By Balance b/d	40,000	36,500	20,000
To Rev. (Loss) a/c	150	100	50	By A’s Capital a/c		`	2,700
To Investment			15,800	By B’s Capital a/c			1,800
To C’s Loan			10,150	By Reserve	4,500	3,000	1,500
To Balance c/d	41,650	37,600

	44,500	39,500	26,000		44,500	39,500	26,000

Balance Sheet (After Retirement)

Liabilities	Rs.	Assets		Rs.
Sundry Creditors	12,600	Bank		4,100
Capital Accounts		Debtors	30,000
A	41,650	Less : Provision	1,800	28,200
B	37,600	Stock		25,000
C’s Loan a/c	10,150	Patents		4,000
Provident Fund	2,500	Plant and Machinery		43,200

	1,04,500			1,04,500