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On the Above Date, Sameer Retired and It Was Agreed That: Pass Necessary Journal Entries for the Above Transactions in the Books of the Firm on Sameer’S Retirement - Accountancy

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

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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

 

 

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

 

 

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

 

 

 

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

 

 

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

 

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

Concept: Statement of Profit and Loss and Balance Sheet in the Prescribed Form with Major Headings and Sub Headings
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