| Balance Sheet of Sameer, Yasmin and Saloni As on 31.3.2016 |
|||
| Liabilities | Rs | Assets | Rs |
|
Creditors General Reserve Capitals: Sameer 3,00,000 Yasmin 2,50,000 Saloni 1,50,000
|
1,10,000 60,000
7,00,000
|
Cash Debtors 90,000 Less: Provision 10,000 Stock Machinery Building Patents Profit and Loss Account |
80,000
80,000 1,00,000 3,00,000 2,00,000 60,000 50,000 |
| 8,70,000 | 8,70,000 | ||
On the above date, Sameer retired and it was agreed that:
1) Debtors of 4,000 will be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts will be maintained
2) An unrecorded creditor of 20,000 will be recorded.
3) Patents will be completely written off and 5% depreciation will be charged on stock, machinery and
building.
4) Yasmin and Saloni will share future profits in the ratio of 3:2
5) Goodwill of the firm on Sameer’s retirement was valued at Rs 5, 40,000.
Pass necessary journal entries for the above transactions in the books of the firm on Sameer’s retirement
Solution
| Journal | ||||
| Sr. No. | Particulars | L.F. |
Dr Rs |
Cr. Rs |
|
General A/c Dr To Sameer’s Capital A/c To Yasmin’s Capital A/c To Saloni’s Capital A/c (Being balance in reserve distributed among all partners in old ratio.) |
60,000
|
24,000 18,000 18,000
|
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|
Sameer’s Capital A/c Dr Yasmin’s Capital A/c Dr Saloni’s Capital A/c To Profit & Loss A/c (Being debit balance Profit & Loss A/c written off among all partners in old ratio.) |
20,000 15,000 15,000
|
50,000
|
||
|
Yasmin’s Capital A/c Dr Saloni’s Capital A/c Dr To Sameer’s Capital A/c (Being goodwill adjusted in gaining ratio.) |
64,800 21,600
|
2,16,000
|
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|
Revaluation A/c To Patent A/c To Stock A/c To Machinery A/c To Building A/c To Creditors A/c (Being decrease in assets and increase in liabilities debited to Revaluation A/c.) |
1,10,000
|
60,000 5,000 15,000 10,000 20,000
|
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|
Provision for Doubtful Debts A/c Dr To Revaluation A/c (Being excess Provision written back.) |
1,700
|
1,700 | ||
|
Sameer’s Capital A/c Dr. Yasmin’s Capital A/c Dr. Saloni’s Capital A/c Dr. To Revaluation A/c (Being loss on revaluation debited to partners capital account in old ratio.) |
43,320 32,490 32,490
|
1,08,300
|
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|
Sameer’s Capital A/c Dr. To Sameer’s Loan A/c (Amount due to Sameer’s transferred to his loan A/c) |
4,76,680
|
4,76,680
|
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Working Note:
WN1: Calculation of Sameer's Share of Goodwill
Gaining Ratio = New Ratio — Old Ratio
Yasmin : `3/5 - 3/10 = 3/10`
Saloni: `2/5 - 3/10 = 1/10`
Gaining Ratio Yasmin: Saloni = 3:1
Sameer's Share of Goodwill = Rs `216000(540000xx4/10)`
Yasmin Share = `216000 xx 3/10 = 64800`
Saloni Share = `216000 xx 1/10 = 21600`
WN2: Calculation of Excess/Deficit Provision for Doubtful Debts
Required Provision (@5%) = `(90000 - 4000) xx 3/100 = 4300`
Existing Provision (after Writing bad-debts) = 6,000
Excess Provision (to be written back) =1,700(6,000 - 4,300)
WN3: Calculation of Sameer's Loan Balance
Amount due to Sameer’s = Opening Capital + Credits – Debits
= 3,00,000 + (24,000 + 2,16,0000) – (20,000 – 43,320)
= 3,00,000 + 2,40,000 – 63,320
Amount due to Sameer’s = Rs 476680
