Question

Banwari, Girdhari and Murari are partners in a firm sharing profits and losses in the ratio of 4: 5: 6. On 31st March 2014, Girdhari retired. On that date, the capitals of Banwari, Girdhari and Murari before the necessary adjustments stood at Rs 2,00,000, Rs 1,00,000 and Rs 50,000 respectively. On Girdhari's retirement, goodwill of the firm was valued at Rs 1,14,000. Revaluation of assets and re-assessment of liabilities resulted in a profit of Rs 6,000. General Reserve stood in the books of the firm at Rs 30,000.
The amount payable to Girdhari was transferred to his loan account. Banwari and Murari agreed to pay Girdhari two yearly instalments of Rs 75,000 each including interest @ 10% p.a. on the outstanding balance during the first two years and the balance including interest in the third year. The firm closes its books on 31st March every year.
Prepare Girdhari's loan account till it is finally paid showing the working notes clearly.

Answer 1

Capital of Girdhari = Rs 1,00,000

Girdhari's Share of Goodwill = `114000 xx 5/15 = 38000`

Girdhari's Share in Revaluation Profit = `6000 xx 5/15 = 2000`

Girdhari's Share in General Reserve = `30000 xx 5/15  = 10000`

Total Amount Payable to Girdhari = Rs 1,00,000 +  rs 38,000 + Rs 2,000 + Rs 10,000 = Rs 1,50,000

 

In books of Banwari & Murari Girdhari's Loan Account
Dr.					Cr.
Date	Particulars	Rs	Date	Particulars	Rs
2015 March 31 March 31	To Cash and Bank A/c To Balance c/d	75,000 90,000	2014 April 1 2015 March 31	By Girdhari's Capital A/c By Interest A/c	1,50,000 15,000
		1,65,000			1,65,000
2016 March 31 March 31	To Cash and Bank A/c To Balance c/d	75,000 24,000	2015 April 1 2016 March 31	By Balance b/d   By Interest A/c	90,000   9,000
		99,000			99,000
2016 March 31	To Cash and Bank A/c	26,400	2016 April 1 2016 March 31	By Balance b/d   By Interest A/c	24,000   2,400
		26,400			26,400

Working Notes:

1) Interest for Year 1 = `150000 xx 10/100 = 15000`

2) Interest for Year 2 = `90000 xx 10/100 =  9000`

3) Interest for Year 1 = `24000 xx 10/100 = 2400`