# Question 38 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 38 Chapter 6 of +2-A

Question 38 Chapter 6 of +2-A

38. A, B, and C are partners sharing profits and losses in the ratio of 4 : 3 : 3. Their Balance Sheet as of 31st March 2019 is:

 Liabilities Amount Assets Amount Creditors 7,000 Land and Building 36,000 Bills Payable 3,000 Plant and Machinery 28,000 Reserves 20,000 Computer Printer 8,000 Capital A/cs: Stock 20,000 A’s Capital 32,000 Sundry Debtors 14,000 B’s Capital 24,000 Less: Provision for Doubtful Debts 2,000 12,000 C’s Capital 20,000 76,000 B’s Loan 2,000 1,06,000 1,06,000

On 1st April 2019, B retired from the firm on the following terms:

1. Goodwill of the firm is to be valued at 14,000.
2. Stock, Land, and buildings are to be appreciated by 10%.
3. Plant and Machinery and Computer Printer are to be reduced by 10%.
4. Sundry Debtors are considered to be good.
5. There is a liability of 2,000 for the payment of outstanding salary to the employees of the firm. This liability was not provided in the Balance Sheet but the same is to be recorded now.
6. The amount payable to B is to be transferred to his Loan Account.

Prepare Revaluation Account, Partners’ Capital Accounts, and the Balance Sheet of A and C after B’s retirement.

## The solution of Question 38 Chapter 6 of +2-A: –

 Revaluation Account Particular Amount Particular Amount To Plant and Machinery 2,800 By Stock A/c 2,000 28,000 × 10% (20,000 × 10%) To Electronic Typewriter 800 By Land and Building A/c 3,600 8,000 × 10% (36,000 × 10%) To Outstanding Salary 2,000 By Provision for Doubtful Debts A/c 2,000 To Profit transferred to A’s Capital A/c 800 B’s Capital A/c 600 C’s Capital A/c 600 2,000 7,600 7,600

 Partners’ Capital Account Part. X Y Z Part. X Y Z To B’s Capital A/c (Goodwill) 1,200 – 600 By Balance B/d 32,000 24,000 20,000 By Reserves A/c 8,000 6,000 6,000 By Revaluation A/c 800 600 600 To B’s Loan A/c 34,800 By A’s Capital A/c – 2,400 – To Balance c/d 38,400 – 24,800 By C’s Capital A/c – 1,800 – 40,800 34,800 26,600 40,800 34,800 26,600

 Balance Sheet Liabilities Amount Assets Amount Creditors 7,000 Land and Building 39,600 Bills Payable 3,000 (36,000 + 3,600) Outstanding Salary 2,000 Plant and Machinery 25,200 (28,000 – 2,800) Electronic Typewriter 7,200 (8,000 – 800) B’s Loan 34,800 Stock 22,000 Capital: (20,000 + 2,000) A’s Capital 38,400 Sundry Debtors 14,000 C’s Capital 24,800 41,200 Bank 2000 1,10,000 1,10,000

#### Calculation of Gaining Ratio

Old Ratio of A, B and C= 4:3:3
B retires from the firm.

Gaining Ratio of A and C= 4:3 (Given)

Goodwill of the firm = Rs 14,000

 B’s Share of Goodwill = Firm’s Goodwill X B’s share = 14,000 X 3 10 = Rs 4,200

 A’s Share of Goodwill = B’s Goodwill X Gaining share of A = 4,200 X 4 7 = Rs 2,400

 C’s Share of Goodwill = B’s Goodwill X Gaining share of C = 4,200 X 3 7 = Rs 1,800

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. 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