Question

A, B and C were equal partners. Their Balance Sheet as at 31-3-2022 was as under:

BALANCE SHEET as at 31-3-2022
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
B/P		20,000	Bank		20,000
Creditors		40,000	Stock		20,000
General Reserve		30,000	Furniture		28,000
P/L		6,000	Debtors	45,000	40,000
Capitals:		1,32,000	Less: RBDD	5,000
A	60,000		Land & Building		1,20,000
B	40,000
C	32,000
		2,28,000			2,28,000

B retired on 1st April, 2022. A and C decided to continue the business as equal partners on the following terms:

1. Goodwill of the firm was valued at ₹ 57,600.
2. Reserve for bad and doubtful debts to be maintained at 10% on debtors.
3. Land and building to be increased to ₹ 1,32,000.
4. Furniture to be reduced by ₹ 8,000.
5. Rent outstanding (not provided for as yet) was ₹ 1,500.

Remaining partners decided to bring sufficient cash in the business to pay off B and to maintain a bank balance of ₹ 24,800. They also decided to readjust their capitals as per their new profit sharing ratio.

Prepare necessary Ledger Accounts and Balance Sheet.

Answer 1

Dr.	Revaluation A/c			Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)
To Furniture A/c		8,000	By Provision for Doubtful debts A/c	500
To Outstanding Rent A/c		1,500	By Land & Building A/c	12,000
To Profit t/f to Partners Capital A/cs:		3,000
A	1,000
B	1,000
C	1,000
		12,500		12,500

 

Partners' Capital Accounts
Particulars	A ₹	B ₹	C ₹	Particulars	A ₹	B ₹	C ₹
To Goodwill Adjustment	15,360	,	3,840	By Balance b/d	60,000	40,000	32,000
To Bank A/c	,	72,200	,	By General Reserve	10,000	10,000	10,000
To Balance c/d	1,05,480	,	70,320	By P&L A/c	2,000	2,000	2,000
				By Revaluation A/c	1,000	1,000	1,000
				By Goodwill Adjustment	,	19,200	,
				By Bank A/c	47,840	,	29,160
Total	1,20,840	72,200	74,160	Total	1,20,840	72,200	74,160

 

Balance Sheet
Liabilities	₹	Assets	₹
Bills Payable	20,000	Bank	24,800
Creditors	40,000	Stock	20,000
Outstanding Rent	1,500	Furniture	20,000
Capital A/cs:		Debtors ₹ 45,000 less Provision ₹ 4,500	40,500
A	1,05,480	Land & Building	1,32,000
C	70,320
Total	2,37,300	Total	2,37,300