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Question
Rajesh, Sathish and Mathan are partners sharing profits and losses in the ratio of 3:2:1 respectively. Their balance sheet as on 31.3.2017 is given below.
| Liabilities | ₹ | Assets | ₹ | |
| Capital accounts: | Premises | 4,00,000 | ||
| Rajesh | 4,00,000 | 9,50,000 | Machinery | 4,20,000 |
| Sathish | 3,00,000 | Debtors | 1,60,000 | |
| Mathan | 2,50,000 | Stock | 3,00,000 | |
| General reserve | 1,20,000 | Cash at bank | 20,000 | |
| Creditors | 50,000 | |||
| Bills payable | 1,80,000 | |||
| 13,00,000 | 13,00,000 |
Mathan retires on 31st March, 2017 subject to the following conditions :
- Rajesh and Sathis will share profits and losses in the ratio of 3:2
- Assets are to be revalued as follows;
Machinery ₹ 4,50,000, Stock ₹ 2,90,000 , Debtors ₹ 1,52,000 - Goodwill of the firm is valued at ₹ 1,20,000.
Prepare the necessary ledger accounts and the balance sheet immediately after the retirement of Mathan.
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Solution
(i) Computation of gaining ratio:
Share Gained = New share - Old Share
Rajesh = `3/5 - 3/6 = (18 - 15)/30 = 3/30`
Sathish = `2/5 - 2/6 = (12 - 10)/30 = 2/30`
Gaining ratio of Rajesh and Sathish is = 3 : 2
(ii) Adjustment for goodwill:
Goodwill = 1,20,000
Share of Goodwill of Manoj = `1,20,000 xx 1/6` = 20,000
It is to be adjusted in the capital accounts of Rajesh and sathish in the gaining ratio of 3 : 2
Rajesh = `3/5 xx 20,000` = 12,000
Sathish = `2/5 xx 20,000` = 8000
| Dr. | Revaluation A/c | Cr. | ||
| Particulars | Rs | Particulars | Rs | Rs |
| To Machinery | 30,000 | By Loss on Revaluation | ||
| To Stock A/c | 10,000 | Rajesh Capital | 24,000 | 48,000 |
| To Debtors | 8,000 | Sathish Capital | 16,000 | |
| Mathan Capital | 8,000 | |||
| 48,000 | 48,000 | |||
| Dr. | Capital Account | Cr. | |||||
| Particulars | Rajesh ₹ | Sathish ₹ | Mathan ₹ |
Particulars | Rajesh ₹ | Sathish ₹ | Mathan ₹ |
| To Revaluation loss A/c | 24,000 | 16,000 | 8,000 | By Balance b/d | 4,00,000 | 3,00,000 | 2,50,000 |
| To Manthan's Capital A/c | 12,000 | 8,000 | - | By Workmen compensation fund | 15,000 | 9,000 | 6,000 |
| To Mathan's loan A/c | - | - | 2,82,000 | By Rajesh Capital A/c | - | - | 12,000 |
| To bal c/d | 4,24,000 | 3,16,000 | - | By Sathish Capital A/c | - | - | 8,000 |
| 4,60,000 | 3,40,000 | 2,90,000 | 4,60,000 | 3,40,000 | 2,90,000 | ||
| By Balance b/d | 4,24,000 | 3,16,000 | - | ||||
| Balance Sheet as on 31.12.2017 | ||||
| Liabilities | Rs | Assets | Rs | Rs |
| Manthan's Loan | 2,82,000 | Machinery | 4,20,000 | 3,90,000 |
| Creditors | 50,000 | Less: Depreciation | 30,000 | |
| Capital A/c | Premises | 4,00,000 | ||
| Rajesh | 4,24,000 | Debtors | 1,60,000 | 1,52,000 |
| Sathish | 3,16,000 | Less: Bad debts | 8,000 | |
| Bills payable | 1,80,000 | Stock | 3,00,000 | 2,90,000 |
| Less: Revalued | 10,000 | |||
| Goodwill | 20,000 | |||
| 12,52,000 | 12,52,000 | |||
