Question 38 Chapter 6 of +2- Part

Question 38 Chapter 6 of +2-Part-1

38 (Adjustment of Goodwill without raising Goodwill A/c Partner Loan A/c Journal) A B and C are carrying an business in partnership sharing profits and losses in the ratio of 3 :2: 1 respectively On 31st December, 2018, the Balance Sheet of the firm stood as follows:

Liabilities Rs. Assets Rs. 
Creditors 13,590Cash 4,700
Capitals A15,000Debtors8,000
B10,000Stock 11,690
C10,000Building 23,000
  Profit & loss A/c 1,200
 48,590 48,590

B retired on the following terms:
(i)Building appreciated by Rs.7,000.
(ii) Provision for bad debts is to make at 5% on debtors.
(iii) Goodwill of the firm valued at Rs. 9,000 and adjustment in this respect be made without raising goodwill account..
(iv) Rs. 5,000 to be paid to B immediately and the balance due to him be treated as loan carrying interest @ 6% per annum.
Pass journal entries to record the above-mentioned transactions and show the Balance Sheet of the firm as it would appear immediately after B’s retirement.

The solution of Question 38 Chapter 6 of +2 Part-1: –

Journal
Date  Particulars
L.F.DebitCredit
 Building A/cDr. 7,000 
 To Revaluation A/c   7,000
 (Being profit of building transferred . )    
      
 Revaluation A/cDr. 400 
 To provision for doubtful debts A/c   400
 (Being provision made on debtors . )    
      
 Revaluation A/cDr. 6,600 
 To A’s capital A/c   3,300
 To B’s capital A/c   2,200
 To C’s capital A/c   1,100
 (Being revaluation on profit )    
      
 A’s capital A/cDr. 2,250 
 C’s capital A/cDr. 750 
 To B’s capital A/c   3,000
 (Being adjustment of goodwill )    
      
 B’s capital A/cDr. 5,000 
 To cash A/c   5,000
 (Being part payment to B)    
      
 B’s capital A/cDr. 10,200 
 To B’s loan A/c   10,200
 (Being settlement of B’s A/c)    
     
Partners’ Capital Account 
ParticularsABCParticularsABC
To B’s capital A/c2,250 750By Balance b/d15,00010,00010,000
To Cash 5,000 By Revaluation A/c3,3002,2001,100
To B’s loan A/c 10,200 By A’s capital A/c 2,250 
    By C’s capital A/c 750 
        
To Balance c/d 16,05010,350    
 18,30015,20011,100 18,30015,20011,100
Balance Sheet
Liabilities
AmountAssetsAmount
Creditors 13,590Cash 900
B’s loan A/c 10,200Debtors8,000 
Capital  Less Provision4007,600
A16,050 Stock 11,690
C10,35026,400Building 30,000
      
      
  50,190  50,190

Comment if you have any questions.
Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 38 Chapter 6 of +2 Part-1 - USHA Publication 12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firm

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