Question 40 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 40 Chapter 6 of +2-A
Question 40 Chapter 6 of +2-A


Question 40 Chapter 6 of +2-A


40. X, Y, and Z are partners sharing profits and losses in the ratio of 3: 2: 1. The Balance Sheet of the firm as of 31st March 2019 was as follows:

LiabilitiesAmountAssets Amount
Creditors  21,000Cash at Bank 5,750
Workmen Compensation Reserve12,000Debtors 40,000 
Investments Fluctuation Reserve 6,000Less: Provision for Doubtful Debts2,00038,000
   Stock  1,24,000
Capital A/cs:  Investment (Market Value 17,600)15,000
X’s Capital 68,000 Patents  50,000
Y’s Capital32,000 Goodwill 6,000
Z’s Capital 21,0001,21,000Advertisement Expenditure 5,250
  1,60,000  1.60.000

Z retired on 1st April 2019 on the following terms:

  1. Goodwill of the firm is to be valued at 34,800.
  2. The value of Patents is to be reduced by 20% and that of machinery to 90%.
  3. Provision for doubtful debts is to be created @ 6% on debtors.
  4. Z took over the investment at market value.
  5. Liability for Workmen Compensation to the extent of 750 is to be created.
  6. A liability of 4,000 included in creditors is not to be paid.
  7. Amount due to Z to be paid as follows: 5,067 immediately, 50% of the balance within one year, and the balance by a draft for 3 Months.

Give necessary Journal entries for the treatment of goodwill, prepare Revaluation Account, Capital Accounts, and the Balance Sheet of the new firm

The solution of Question 40 Chapter 6 of +2-A: –


Journal Entries

 X’s Capital A/cDr. 3,000 
 Y’s Capital A/cDr. 2,000 
 Z’s Capital A/cDr. 1,000 
 To Goodwill A/c   6,000
 (Being existing goodwill transferred to Partners′ Capital Accounts in their old ratio i.e. 5:3:2)   
 X’s Capital A/cDr. 3,480 
 Y’s Capital A/cDr. 2,320 
 To Z’s Capital A/c   5,800
 (Being share of the goodwill of retiring partner credit to his capital account)   


Revaluation Account
To Patents A/c2,000By Investments A/c2,600
To Machinery5,00017,600 – 15,000 
To Prov. for Doubtful Debts400By Creditors A/c4,000
  By Loss transferred to 
   A’s Capital A/c400  
   B’s Capital A/c267 
   C’s Capital A/c1332,000
  7,400  7,400


Partners’ Capital Account
Part.XY Z


To Goodwill A/c3,0002,0001,000By Balance B/d1,00,00060,00050,000
To Revaluation A/c400267133By X’s Capital A/c3,480
To Z’s Capital A/c3,4802,320By Y’s Capital A/c  2,320
To Adv. Exp. A/c2,6251,750875By WCR A/c5,6253,7501,875
To Investments A/c17,600By Inv. Flu. Reserve A/c3,0002,0001,000
To Bank A/c5,067    
To Bills Payable A/c2,500    
To Z’s Loan A/c2,500    
To Balance c/d67,12031,413    
 76,62537,75029,625 76,62537,75029,625


Balance Sheet
Sundry Creditors17,000Cash at Bank683
Workmen Compensation Claim7505,750 – 5,067 
Bills Payable2,500Stock30,000
Z’s Loan 2,500Less: Prov. For D/D2,40037,600
Capital:  Stock1,12,000
X’s Capital67,120 1,24,000 – 12,000 
Y’s Capital31,41341,200Machinery45,000
  1,21,283  1,21,283


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)

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



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

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms




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