Question

12.A, B and C are equal partners in a firm, B retires and his claim including his capital and his

share of goodwill is ` 40,000. He is paid in kind a vehicle valued at ` 20,000 unrecorded in

the books of the firm till the date of retirement and the balance in cash. Give the journal

entries for recording the payment to B in the books of the firm.​

Answer 1

A journal is the business transactions record in the firm's accounting books.

The correct journal entries are -

• Vehicle A/c Dr. 20,000  

To Revaluation A/c 20,000

(Being unrecorded vehicle recorded on the date of retirement of B )

• Revaluation A/c Dr.20,000  

To A's Capital A/c  6,667

To B's Capital A/c  6,667

To C's Capital A/c  6,666

(Being the profit due to the unrecorded asset transferred to capital account of partners)        

• B's Capital A/c Dr.     46,667  

To Vehicle A/c    20,000

To Cash A/c       26,667

(Being on B's retirement he was given vehicle and cash)