Question 39 Chapter 6 of +2- Part

Question 39 Chapter 6 of +2-Part-1

39 (Goodwill not appearing in Books/Payment to Retiring Partner made in Equal Installments) C , P and S were partners sharing profit in the ratio of 2/5, 2/10 and 3/10respectively. Their balance sheet on 31st December 2018 was as follows :

LiabilitiesRs.AssetsRs. 
Capitals Buildings 18,000
C16,000Plant14,000
P12,000Motor Car4,000
S10,000Stock10,000
RESERVE 5,000Debtors                    7,000 
Bills payable 2,000Less : reserve           1,0006,000
Creditors 8,000Cash at bank 1,000
    
 1,06,000 1,06,000

P retires on that date on the following terms :

  1. The goodwill of the firm is to be valued at Rs. 7,000.
  2. Stock and buildings are to be appreciated by 10%.
  3. Plant and motor car are to be depreciated by 10%.
  4. Liability for the payment of gratuity to workers Rs. 2,000 not yet books, but the same is to be provided for.
  5. Provision for bad debts is no more necessary.
  6. It is decided not to maintain goodwill account in the books.
  7. The amount payable to P is to be paid in three equal installments beginning from 1st January ; 2019 with interest at 10% p.a.
    You are required to prepare :
    (a) Revaluation account (b) Partner’s capital account (c) New balance sheet of C & S (d) P’s loan account

The solution of Question 39 Chapter 6 of +2 Part-1: –

Revaluation Account
Particulars
AmountParticularsAmount
To pant A/c 1,400By stock 1,000
To motor A/c 400By land & building A/c 1,800
To provision for gratuity A/c 2,000By reserve for debts 1,000
      
  3,800  3,800
Partners’ Capital Account 
ParticularsXYZParticularsXYZ
To P’s capital A/c1,200 9800By Balance b/d16,00012,00010,000
To P’s loan A/c 15,600 By Revaluation A/c2,0001,5001,500
    By A’s capital A/c 1,200 
    By C’s capital A/c 900 
        
To Balance c/d 16,80010,600    
 18,00015,60011,500 18,00015,60011,500
Balance Sheet
Liabilities
AmountAssetsAmount
Creditors 8,000BUILDING 19,800
Bills payable 2,000Plant 12,600
P’s loan A/c 2,000Motor car 3,600
Provision for gratuity 15,600Stock 11,000
Capital A/c  Debtors 7,000
X16,800 Bank 1,000
Z10,60027,400   
  55,000  55,000
Dr.P’s loan A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
1 Year   1 Year   
Jan 1To cash A/c 8,000Jan 1By Sale Return A/c 15,600
Dec. 31To balance c/d  11,440Dec. 31By Output CGST A/c 1,040
   53,400   53,400
2 Year   2 Year   
Jan 1To cash A/c 6,240Jan 1By P’s capital A/c 11,440
Dec. 31To balance c/d 5,724Dec. 31By interest 524
   11,964   11,964
3 Year   3 Year   
Jan 1To cash A/c 5,724Jan 1By Balance b/d 5,724
        
   5,724   5,724

TREATMENT OF GOODWILL :

Particulars
Amount
Value of the goodwill of the firm 7,000
P retires his share (3/10) 2,100
Gaining ratio of C & S is 4:3  
Hence C is debited 1,200
Hence S is debited900

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

Leave a Reply

About us

About us, we are here to improve your knowledge in all financial & Business related topics and to get better carrier opportunities. The author has about 10-year Experience in tuition Business. It is very difficult to teach a large number of students with a personal touch or in a classroom. 

Animation's Resource websites

All Icons and images used on my website were downloaded from the following website please go and download free:-

close