Question

Aman, Bankim and Chitra are partners of a firm sharing profit and loss in the 3 : 3 : 2 ratio. Their firm Balance Sheet as on 31st March, 2023 is as under :

Balance Sheet as on 31st March, 2023
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Bills Payable		8,050	Cash		18,900
General Reserve		14,000	Debtors		43,750
Creditors		30,100	Investments		42,000
Capital Accounts:			Machinery		30,450
Aman	42,000	1,19,000	Furniture		22,050
Bankim	45,500		Equipment		14,000
Chitra	31,500
		1,71,150			1,71,150

On 1st April 2023, Chitra retired from the firm on the following terms:

(1) Outstanding amount of retiring partner Chitra, be transferred to her loan account.

(2) Write off ₹ 1,750 as bad debts.

(3) ₹ 350 is now not payable to creditors.

(4) Assets are revalued as under:

Furniture	₹ 21,000
Machinery	₹ 28,000
Equipments	₹ 14,700

Pass necessary Journal entries in the books of firm.

Answer 1

In the books of Aman, Bankim and Chitra
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2023
April 1.	General Reserve A/c   ....Dr.		14,000	-
	To Aman’s Capital A/c		-	5,250
	To Bankim’s Capital A/c		-	5,250
	To Chitra’s Capital A/c		-	5,250
	(Being General Reserve amount distributed among partners in their old ratio)
1	Revaluation A/c   ....Dr.		5,250	-
	To Bad debts A/c		-	1,750
	To Furniture A/c		-	1,050
	To Machinery A/c		-	2,450
	(Being assets depreciated)
1	Equipments A/c  ....Dr.		700	-
	Creditors A/c  ....Dr.		350	-
	To Revaluation A/c		-	1,050
	(Being Equipments value appreciated and creditors amount now not payable)
1	Aman’s Capital A/c  ....Dr.		1,575	-
	Bankim’s Capital A/c  ....Dr.		1,575	-
	Chitra’s Capital A/c  ....Dr.		1,050	-
	To Revaluation A/c		-	4,200
	(Being loss on revaluation distributed and transferred to partners’ Capital accounts)
1	Chitra’s Capital A/c		33,950	-
	To Chitra’s Loan A/c		-	33,950
	(Being balance amount due to partner Chitra, transferred to her Loan account)

Working Note:

Dr.	Revaluation Account			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Bad Debts A/c	1,750	By Equipments A/c		700
To Furniture A/c	1,050	By Creditors A/c		350
To Machinery A/	2,450	By Partner’s Capital A/c (Loss):
		Aman	1,575	4,200
		Bankim	1,575
		Chitra	1,050
	5,250			5,250

 

Dr.	Partners’ Capital Accounts						Cr.
Particulars	Aman	Bankim	Chitra	Particulars	Aman	Bankim	Chitra
To Revaluation A/c	1,575	1,575	1,050	By Balance b/d	42,000	45,500	31,500
To Loan A/c	-	-	33,950	By General Reserve A/c	5,250	5,250	3,500
To Balance c/d	45,675	49,175	-
	47,250	50,750	35,000		47,25	50,750	35,000