Question

Lalit, Madhur and Neena were partners sharing profits as 50%, 30% and 20% respectively. On 31st March, 2025, their Balance Sheet was as follows:

Liabilities	₹	₹	Assets	₹	₹
Creditors		28,000	Cash		34,000
Provident Fund		10,000	Debtors	47,000	44,000
Investment Fluctuation Fund		10,000	Less: Provision for Doubtful Debts	3000
Capital A/cs:		1,15,000	Stock		15,000
Lalit	50,000		Investment		40,000
Madhur	40,000		Goodwill		20,000
Neena	25,000		Profit and Loss A/c		10,000
		1,63,000			1,63,000

On this date, Madhur retired and Lalit and Neena agreed to continue on the following terms:

1. The goodwill of the firm was valued at ₹ 51,000.
2. There was a claim for Workmen’s Compensation to the extent of ₹ 6,000.
3. Investment were brought down to ₹ 15,000.
4. Provision for bad debts was reduced by ₹ 1,000.
5. Madhur was paid ₹ 10,300 in cash and the balance was transferred to his loan account payable in two equal instalments together with interest @12% p.a.

Prepare Revaluation Account, Partner’s Capital Accounts and Madhur’s Loan Account till the loan is finally paid off.

Answer 1

Dr.	Revaluation A/c			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Workmen’s Compensation claim A/c	6,000	By Provision for Doubtful Debts A/c		1,000
To Investment A/c	15,000	By Loss t/f to capital A/cs:		20,000
		Lalit	10,000
		Madhur	6,000
		Neena	4,000
	21,000			21,000

 

Dr.	Partner’s Capital A/c						Cr.
Particulars	Lalit	Madhur	Neena	Particulars	Lalit	Madhur	Neena
To Goodwill A/c	10,000	6,000	4,000	By Balance b/d	50,000	40,000	25,000
To P & L A/c	5,000	3,000	2,000	By Lalit’s Capital A/c	-	10,929	-
To Revaluation A/c - Loss	10,000	6,000	4,000	By Neena’s Capital A/c	-	4,371	-
To Madhur’s capital A/c	10,929	-	4,371
To Cash A/c	-	10,300	-
To Madhur’s Loan A/c	-	30,000	-
To Balance c/d	14,071	-	10,629
	50,000	55,300	25,000		50,000	55,300	25,000

 

Dr.	Madhur’s Loan A/c				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
31.3.22	To Bank A/c	18,600	1.4.21	By Balance b/d	30,000
31.3.22	To Balance c/d	15,000	31.3.22	By Interest A/c	3,600
		33,600			33,600
31.3.23	To Bank A/c	16,800	1.4.22	By Balance b/d	15,000
			31.3.23	By Interest A/c	1,800
		16,800			16,800

Working Notes:

1. Old ratio of Lalit, madhur & Neena = 50 : 30 : 20

Madhur retired, 

New ratio of Lalit & Neena = 5 : 2

Gaining Ratio = New ratio (i.e., 5 : 2)

2. Goodwill of the firm = ₹ 51,000

Madhur’s share of goodwill = `51,000xx3/10`

= ₹ 15,300

Balance Sheet
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Creditors		28,000	Cash		23,700
Provident Fund		10,000	Debtors	47,000	45,000
Madhur’s Loan		30,000	Less: Provision for Doubtful Debts	2,000
Workmen’s Compensation claim		6,000	Stock		15,000
Capital A/cs:		24,700	Investment	40,000	15,000
Lalit	14,071		Less: decreased	25,000
Neena	10,629
		98,700			98,700