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Prepare: 1. Revaluation Account 2. Partner’S Capital Accounts and 3. Balance Sheet of the Firm After Retirement of Sheela. - Accountancy

Ledger

RadhaSheela and Meena were in partnership sharing profits and losses in the proportion of 3:2:1. On April 1, 2017, Sheela retires from the firm. On that date, their Balance Sheet was as follows:

Liabilities Amt
(Rs.)
Amt
(Rs.)
Assets Amt (Rs.)
Trade Creditors   3,000 Cash-in-Hand 1,500
Bills Payable   4,500 Cash at Bank 7,500
Expenses Owing   4,500 Debtors 15,000
General Reserve   13,500

Stock

12,000
Capitals:   45,000 Factory Premises 22,500
Radha 15,000 Machinery 8,000
Sheela 15,000 Losse Tools 4,000
Meena 15,000    
    70,500   70,500

The terms were:
a) Goodwill of the firm was valued at Rs 13,500.
b) Expenses owing to be brought down to Rs 3,750.
c) Machinery and Loose Tools are to be valued at 10% less than their book value.
d) Factory premises are to be revalued at Rs 24,300.

Prepare:
1. Revaluation account
2. Partner’s capital accounts and
3. Balance sheet of the firm after retirement of Sheela.

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Solution

Books of Radha and Meena
Revaluation Account
Dr.                                                                                            Cr.

Particulars

Amt
(
Rs.)

Particulars

Amt (Rs.)

Machinery

800

Expenses Owing

750

Loose Tools

400

Factory Premises

1,800

Profit transferred to Capital Account:

 

 

 

 

 

 

Meena

675

 

 

Radha

450

 

 

Sheela

225

1,350

 

 

2,550

 

2,550

                                   Parters’ Capital Account
Dr.                                                                                             Cr.

Particulars

Radha

Sheela

Meena

Particulars

Radha

Sheela

Meena

Sheela’s Capital A/c

3,375

 -

1,125

Balance b/d

15,000

15,000

15,000

Sheela’s Loan A/c

 -

24,450

 -

General Reserve

6,750

4,500

2,250

Balance c/d

19,050

 -

16,350

Revaluation (Profit)

675

450

225

 

 

 

 

 

Radha’s Capital A/c

 -

3,375

 -

 

 

 

Meena’s Capital A/c

 -

1,125

 -

 

22,425

24,450

17,475

 

22,425

24,450

17,475

                    Balance Sheet as on April 01, 2017

Liabilities

Amt
(
Rs.)

Assets

Amt
(Rs.)

Trade Creditors

 

3,000

Cash in Hand

1,500

Bills Payable

 

4,500

Cash at Bank

7,500

Expenses Owing

 

3,750

Debtors

15,000

Sheela’s Loan

 

24,450

Stock

12,000

 

 

 

Factory Premises

24,300

Capitals:

 

 

 

35,400

Machinery

8,000

 

7,200

Radha

19,050

Less: 10%

(800)

Meena

16,350

Loose Tools

4,000

 

3,600

 

 

 

Less: 10%

(400)

 

 

71,100

 

71,100

Working Notes:
1) Sheela’s share of goodwill
=Total goodwill of the firm × Retiring Partner’s share
= 13,500 x `2/6` = 4,500.
2) Gaining Ratio = New Ratio − Old Ratio

Radha’s Share = `3/3 -3/6 = [18-12]/24 = 6/24`

Meena’s Shares = `1/4 - 1/6 = [6 -4]/24 = 2/6`

Gaining Ratio between Radha and Meena = 6 : 2 or 3 : 1.

Concept: Ascertaining the Amount Due to Retiring/Deceased Partner
  Is there an error in this question or solution?
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APPEARS IN

NCERT Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts
Chapter 4 Reconstitution of a Partnership Firm – Retirement/Death of a Partner
Exercise | Q 6 | Page 215
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