P Q and R are partners sharing profits in the ratio of 3:2:1. Their Balance Sheet as at 31 st March, 2024 stood as: Liabilities ₹ Assets ₹ Capital…
CA Foundation · Accounting · MTP · June 2024
P Q and R are partners sharing profits in the ratio of 3:2:1. Their Balance Sheet as at 31 st March, 2024 stood as: Liabilities ₹ Assets ₹ Capital Accounts Building 10,00,000 P 8,00,000 Furniture 2,40,000 Q 4,20,000 Office equipments 2,80,000 R 4,00,000 16,20,000 Stock 2,50,000 Sundry Creditors 3,70,000 Sundry debtors 3,00,000 General Reserves 3,60,000 Less: Provision for Doubtful debts 30,000 2,70,000 Cash at Bank 3,10,000 23,50,000 23,50,000 Q retired on 1 st April, 2024 subject to the following conditions: (i) Office Equipments revalued at 3,27,000. (ii) Building revalued at 15,00,000. Furniture is written down by - 40,000 and Stock is reduced to 2,20,000. (iii) Provision for doubtful debts is to be created @ 5% on debtors. (iv) Goodwill was to be valued at 3 years purchase of average 4 years profit which were: Year ₹ 2020 90,000 2021 1,40,000 2022 1,20,000 2023 1,30,000 (v) Amount due to Q is to be transferred to his Loan Account. Prepare the Revaluation Account, Partners' Capital Accounts and the Balance Sheet immediately after Q's retirement.
Suggested Answer and Working Notes:
Revaluation Account Particulars ₹ Particulars ₹ To Furniture A/c 40,000 By Office equipment A/c 47,000 To Stock A/c 30,000 By Building A/c 5,00,000 By Provision for doubtful debts 15,000 To Partners’ capital A/cs: P 2,46,000 Q 1,64,000 R 82,000 4,92,000 5,62,000 5,62,000 Partners’ Capital Accounts Particulars P (₹) Q (₹) R (₹) Particulars P (₹) Q (₹) R (₹) To Q’s capital A/c 90,000 By Balance b/d 8,00,000 4,20,000 4,00,000 To Q’s loan A/c 8,24,000 By General Reserve 1,80,000 1,20,000 60,000 To Balance c/d 11,36,000 5,12,000 By Revaluation reserve 2,46,000 1,64,000 82,000 By P’s capital A/c 90,000 By R’s capital A/c 30,000 12,26,000 8,24,000 5,42,000 12,26,000 8,24,000 5,42,000 Balance Sheet as on 1.4.2024 (After Q’s retirement) Liabilities Particulars ₹ Assets Particulars ₹ Capital accounts: Building 15,00,000 P 11,36,000 Furniture 2,00,000 R 5,12,000 16,48,000 Office equipment 3,27,000 Q’s loan account 8,24,000 Stock 2,20,000 Sundry creditors 3,70,000 Sundry debtors 3,00,000 Less: Provision for doubtful debts (15,000) 2,85,000 Cash at bank 3,10,000 28,42,000 28,42,000 Working Notes: Calculation of goodwill:
Topics: Retirement of a Partner
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