Question

Aman, Barman and Raman were partners sharing Profits & Losses in the ratio 5 : 3 : 2. Their Balance Sheet on March 31, 2025 was as follows

Liabilities	Amount (₹)	Assets	Amount (₹)
Aman’s Capital	80,000	Bank	30,000
Barman’s Capital	70,000	Building	1,00,000
Raman’s Capital	50,000	Furniture	60,000
Workmen Compensation Reserve	50,000	Debtors	50,000
Accumulated Depreciation on Building	20,000	Stock	40,000
Profit and Loss	40,000	Prepaid Expenses	20,000
Creditors	25,000	Deferred Revenue Exp.	20,000
Outstanding Expenses	15,000	Goodwill	30,000
	3,50,000		3,50,000

On the above date Barman retired and his share was acquired by Aman and Raman equally. Following agreements were agreed upon:

1. Create Provision for doubtful debts @ 10%.
2. Market value of Building is ₹ 1,00,000 and Furniture was overvalued by 20%.
3. Stock was valued at ₹ 55,000. Creditors of ₹ 15,000 took over stock of ₹ 10,000 in settlement of their claims.
4. Goodwill of the firm was valued at ₹ 80,000.
5. Prepaid Expenses are worthless and Outstanding Expenses are now ₹ 20,000.
6. ₹ 20,000 was immediately paid to Barman on retirement brought in Aman and Raman in ratio 3 : 2.

Prepare Revaluation Account and Partner’s Capital Account at the time of retirement of partner.

Answer 1

Dr.	Revaluation Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Furniture	10,000	Building	20,000
Prepaid Expenses	20,000	Stock	15,000
Prov. For doubtful debts	5,000	Creditors	5,000
Outstanding Expenses	5,000
	40,000		40,000

 

Dr.	Partner’s Capital Account						Cr.
Particulars	Aman	Barman	Raman	Particulars	Aman	Barman	Raman
Def. Rev. Exp.	10,000	6,000	4,000	Balance b/d	80,000	70,000	50,000
Goodwill	15,000	9,000	6,000	WCR	25,000	15,000	10,000
Barman’s Cap.	12,000	-	12,000	Profit and Loss	20,000	12,000	8,000
Cash	-	20,000	-	Aman’s Capital	-	12,000	-
Barman’s Loan	-	86,000	-	Raman’s Capital	-	12,000	-
Bal c/d	1,00,000	-	54,000	Cash	12,000	-	8,000
Total	1,37,000	1,21,000	76,000	Total	1,37,000	1,21,000	76,000