Question

Anand, Bihari and Shivin are equal partners in a firm. Bihari retires and his claim including his capital and his share of goodwill is ₹ 40,000. He is paid in kind, a vehicle valued at ₹ 20,000 which is unrecorded in the books of the firm till the date of retirement and the balance in cash.

You are required to give the journal entries for recording the payment to Bihari in the books of the firm.

Answer 1

Journal
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
(1)	Vehicle A/c       ...Dr.		20,000
	To Revaluation A/c			20,000
	(Being unrecorded asset recorded)
(2)	Revaluation A/c      ...Dr.		20,000
	To Anand’s Capital A/c			6,666
	To Bihari’s Capital A/c			6,667
	To Shivin’s Capital A/c			6,667
	(Being Revaluation profit t/f to capital A/cs in old ratio i.e., 1 : 1 : 1)
(3)	Bihari’s Capital A/c        ...Dr.		46,667
	To Vehicle A/c			20,000
	To Cash A/c			26,667
	(Being Bihari’s claim discharged)