Harish, Paresh and Mahesh were three partners as sharing profits and losses in the ratio of 5:4:1. Paresh retired on 31st March, 2017. His capital on 1st April, 2016, was Rs. 80,000. During the year 2016-17, he made drawings of Rs. 5,000. He was to be charged interest on drawings of ` 100. The partnership deed provides that on the retirement of a partner, he will be entitled to:
(i) His share of capital.
(ii) Interest on capital @ 10% per annum.
(iii) His share of profit for the year of his retirement.
(iv) His share of goodwill in the firm.
(v) His share in the profit/loss on revaluation of assets and liabilities.
(a) Paresh's share in the profits of the firm for the year 2016-17 was Rs. 20,000.
(b) Goodwill of the firm was valued at Rs. 24,000.
(c) The firm suffered a loss of Rs.12,000 on the revaluation of assets and liabilities.
(d) It was decided to transfer the amount due to Paresh to his loan account bearing interest @ 6% per annum. The loan was to be repaid in two equal annual instalments, the first instalment to be paid on 31st March, 2018.
You are required to prepare:
(i) Paresh's Capital Account.
(ii) Paresh's Loan Account till it is finally closed.
Paresh’s Capital A/c
|To Drawings||5,000||By Balance b/d||80,000|
|To Invest on Drawings||100||By IOC||8,000|
|To Revaluation||4,800||By P/L Appropriation A/c||20,000|
|To Paresh’s Loan A/c||1,07,700||By Harish’s Capital A/c||8,000|
|By Mahesh’s Capital A/c||1,600|
Paresh’s Loan A/c
|31/3/2017||To Balance c/d||1,07,700||31/3/2017||By Paresh’s Capital||1,07,700|
|31/3/2018||To Bank||60,312||1/4/2017||By Balance b/d||1,07,700|
|31/3/2018||To Balanced c/d||53,850||31/3/2018||By IOL||6,462|
|31/3/2019||To Bank||57,081||1/4/2018||By balance b/d||53,850|