Question

Riddhi, Siddhi and Kirti are partners in a firm. They share profis and losses in the ratio 3 : 1 : 1 respectively.

Their Balance Sheet as on 31^st March, 2020 is given below:

Balance Sheet as on 31st March, 2020
Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	45,000	Motor Truck	1,10,000
Bills Payable	30,000	Plant and Machinery	40,000
General Reserve	55,000	Building	80,000
Capital Accounts:		Livestock	55,000
Riddhi	1,30,000	Debtors	65,000
Siddhi	1,05,000	Freehold property	52,500
Kirti	55,000	Bank	17,500
	4,20,000		4,20,000

On 1^st April, 2020 Kirti retired on the following terms:

1. Goodwill was valued at ₹ 50,000 and to be retained in the business.
2. Assets were revalued as under: Debtors - ₹ 57,000, Live Stock ₹ 65,000, Building - ₹ 82,000, Plant and Machinery - ₹ 41,000, Motor Truck - ₹ 1,00,000
3. Riddhi and Siddhi contributed additional capital through RTGS of ₹ 55,000 and ₹ 30,000 respectively.
4. Balance of Kirti’s capital account to be transferred to her loan account.

Pass Journal Entries in the books of the new firm.

Answer 1

In the books of New Firm Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
April 1	General Reserve A/c    ...Dr.		55,000	-
	To Riddhi’s Capital A/c		-	33,000
	To Siddhi’s Capital A/c		-	11,000
	To Kirti’s Capital A/c		-	11,000
	(Being General Reserve transferred to all Partner’s Capital A/cs in PSR)
2	Bank A/c    ...Dr.		85,000	-
	To Riddhi’s Capital A/c		-	55,000
	To Siddhi’s Capital A/c		-	30,000
	(Being additional capital introduced by continuing partners)
3	Revaluation A/c    ...Dr.		18,000	-
	To RDD/Debtors A/c		-	8,000
	To Motor Truck A/c		-	10,000
	(Being decrease in the value of asset transferred to Revaluation A/c)
4	Livestock A/c    ...Dr.		10,000	-
	Building A/c    ...Dr.		2,000	-
	Plant and Machinery A/c    ...Dr.		1,000	-
	To Revaluation A/c		-	13,000
	(Being appreciation in the value of assets transferred to Revaluation A/c)
5	Goodwill A/c    ...Dr.		50,000	-
	To Riddhi’s Capital A/c		-	30,000
	To Siddhi’s Capital A/c		-	10,000
	To Kirti’s Capital A/c		-	10,000
	(Being goodwill raised and distributed to all partners in PSR)
6	Riddhi’s Capital A/c    ...Dr.		3,000	-
	Siddhi’s Capital A/c    ...Dr.		1,000	-
	Kirti’s Capital A/c    ...Dr.		1,000	-
	To Revaluation A/c		-	5,000
	(Being loss on revaluation transferred to Partner’s Capital A/cs)
7	Kirti’s Capital A/c    ...Dr.		75,000	-
	To Kirti’s Loan A/c		-	75,000
	(Being balance of Kirti’s Capital A/c transferred to Kirti’s Loan A/c)

Working Note:

Dr.	Revaluation Account			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Motor Truck	10,000	By Plant & Machinery		1,000
To Debtors	8,000	By Building		2,000
		By Livestock		10,000
		By Revaluation Loss Transferred to all Partners’ Capital A/cs (3 : 1 : 1)		5,000
		Riddhi	3,000
		Siddhi	1,000
		Kirti	1,000
	18,000			18,000

 

Dr.	Kirti’s Capital Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Revaluation Loss A/c	1,000	By Balance b/d	55,000
To Kirti’s Loan A/c (Bal. fig.)	75,000	By General Reserve	11,000
		By Goodwill	10,000
	76,000		76,000