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 :
|Bills payable||2,000||Less : reserve 1,000||6,000|
|Creditors||8,000||Cash at bank||1,000|
P retires on that date on the following terms :
- The goodwill of the firm is to be valued at Rs. 7,000.
- Stock and buildings are to be appreciated by 10%.
- Plant and motor car are to be depreciated by 10%.
- Liability for the payment of gratuity to workers Rs. 2,000 not yet books, but the same is to be provided for.
- Provision for bad debts is no more necessary.
- It is decided not to maintain goodwill account in the books.
- 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 Content covered in this article:
The solution of Question 39 Chapter 6 of +2 Part-1: –
|To pant A/c||1,400||By stock||1,000|
|To motor A/c||400||By land & building A/c||1,800|
|To provision for gratuity A/c||2,000||By reserve for debts||1,000|
|Partners’ Capital Account|
|To P’s capital A/c||1,200||9800||By Balance b/d||16,000||12,000||10,000|
|To P’s loan A/c||15,600||By Revaluation A/c||2,000||1,500||1,500|
|By A’s capital A/c||1,200|
|By C’s capital A/c||900|
|To Balance c/d||16,800||–||10,600|
|P’s loan A/c||2,000||Motor car||3,600|
|Provision for gratuity||15,600||Stock||11,000|
|Dr.||P’s loan A/c||Cr.|
|1 Year||1 Year|
|Jan 1||To cash A/c||8,000||Jan 1||By Sale Return A/c||15,600|
|Dec. 31||To balance c/d||11,440||Dec. 31||By Output CGST A/c||1,040|
|2 Year||2 Year|
|Jan 1||To cash A/c||6,240||Jan 1||By P’s capital A/c||11,440|
|Dec. 31||To balance c/d||5,724||Dec. 31||By interest||524|
|3 Year||3 Year|
|Jan 1||To cash A/c||5,724||Jan 1||By Balance b/d||5,724|
TREATMENT OF GOODWILL :
|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 debited||900|
Comment if you have any questions.
Also, Check out the solved question of previous Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement