Question

Given below is the Balance sheet of Amar, Akbar and Anthony who were sharing profits and losses equally:

Balance Sheet as on 31st March, 2020
Liabilities	Amount ₹	Assets		Amount ₹
Creditors	31,000	Cash		39,000
General Reserve	24,000	Debtors	32,000
Capital Accounts:		Less: R.D.D	4,000	28,000
Amar	57,400	Furniture		30,000
Akbar	63,600	Machinery		80,000
Anthony	60,000	Motor Car		50,000
		Profit and Loss A/c		9,000
	2,36,000			2,36,000

Amar retired on 1st April, 2020 from the firm on the following terms:

1. Furniture to be valued at ₹ 28,000, Machinery ₹ 76,000 and Motor car ₹ 47,600.
2. R.D.D. to be maintained at 5% on debtors.
3. Goodwill of the firm is to be valued at ₹ 30,000. However, only Amar’s share is to be raised in the books.
4. A part payment of ₹ 20,000 to be made to Amar and the balance to be transferred to his Loan Account.

Prepare:

1. Profit and Loss Adjustment A/c.
2. Partners’ Capital Account.
3. Balance Sheet of the New firm.

Answer 1

Dr.	In the Books of the Firm Profit and Loss Adjustment A/c			Cr.
Particulars	Amount ₹	Particulars	Amount ₹	Amount ₹
To Furniture a/c	2,000	By R.D.D (4,000 - 1,600)		2,400
To Machinery A/c	4,000	By Partner's Capital A/c (Loss)
To Motor Car A/c	2,400	Amar	2,000	6,000
		Akbar	2,000
		Anthony	2,000
	8,400			8,400

 

 

Dr.	Partner's Capital A/c						Cr.
Particulars	Amar	Akbar	Anthony	Particulars	Amar	Akbar	Anthony
To Profit & Loss A/c (1:1:1)	3,000	3,000	3,000	By Balance b/d	57,400	63,600	60,000
To Profit & Loss A/c	2,000	2,000	2,000	By General Reserve A/c	8,000	8,000	8,000
To Cash A/c	20,000			By Goodwill A/c	10,000
To Amar's Loan A/c	50,400
To Balance c/d		66,600	63,000
	75,400	71,600	68,000		75,400	71,600	68,000

 

Balance Sheet as on 1st April 2020
Liabilities	Amount	Amount	Assets	Amount	Amount
Creditor		31,000	Cash		19,000
To Amar's Loan A/c		50,400	Debtors	32,000	30,400
Capital A/c			Less: R.D.D (5%)	1,600
Akbar		66,600	Furniture	30,000	28,000
Anthony		63,000	Less: Depriciation	2,000
			Machinery	80,000	76,000
			Less: Depreciation	4,000
			Motor Car	50,000	47,600
			Less: Depreciation	2,400
			Goodwill		10,000
		2,11,000			2,11,000

Working Note:

(1)

Dr.	Cash A/c		Cr.
Particulars	Amount	Particulars	Amount
By Balance b/d	39,000	By Amar's capital A/c	+10,000
		By Balance c/d	19,000
	39,000		39,000

(2) General Reserve

Amar =` 24,000 xx  1/3 = 8,000`

Akbar = ` 24,000 xx  1/3 = 8,000`

Anthony = ` 24,000 xx  1/3 = 8,000`

(3) R.D.D - `32,000 xx 5% = 1600`