Question

P, Q and R were partners in a firm sharing profits in the ratio of 3 : 2 : 1 respectively. On March 31st, 2022, the balance sheet of the firm stood as follows:

Balance Sheet
Liabilities		Amount (₹)	Assets	Amount (₹)
Creditors		13,000	Cash	4,700
Bills Payable		590	Debtors	8,000
Capital Accounts:			Stock	11,690
P	15,000	35,000	Buildings	23,000
Q	10,000		Profit and Loss A/c	1,200
R	10,000
		48,590		48,590

Q retired on the above-mentioned date on the following terms:

1. Buildings to be appreciated by ₹ 7,000
2. A provision for doubtful debts to be made at 5 % on debtors.
3. Goodwill of the firm is valued at ₹ 18,000 and adjustment to be made by raising and writing off the goodwill.
4. ₹ 2,800 was to be paid to Q immediately and the balance in his capital account to be transferred to his loan account carrying interest as per the agreement.
5. Remaining partner decided to maintain equal capital balances, by opening current account.

Prepare the revaluation account and partner’s capital accounts.

Answer 1

Dr.	Revaluation A/c			Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
To Provision for Doubtful Debts		400	By Building A/c	7,000
To Partner’s Capital A/c:
P	3,300	6,600
Q	2,200
R	1,100
		7,000		7,000

 

Dr.	Partner’s Capital Accounts						Cr.
Particulars	P	Q	R	Particulars	P	Q	R
Goodwill A/c	13,500	-	4,500	Balance b/d	15,000	10,000	10,000
Profit & Loss	600	400	200	Revaluation A/c	3,300	2,200	1,100
Cash	-	2,800	-	Goodwill A/c	9,000	6,000	3,000
Q’s Loan	-	15,000	-	R’s Current A/c	-	-	1,900
P’s Current A/c	1,900	-	-
Balance c/d	11,300	-	11,300
	27,300	18,200	16,000		27,300	18,200	16,000