Question

A, B and C are partners sharing profits and losses in the ratio of 4:3: 3. Their Balance Sheet as at
31st March, 2020 is:
Assets
₹
Liabilities
₹
Creditors
Bills Payable
Reserves
Capital A/cs:
7,000
3,000
20,000
Land and Building
Plant and Machinery
Computer Printer
Stock
Sundry Debtors
Less: Provision for Doubtful Debts
Bank
36,000
28,000
8,000
20,000
А
32,000
24,000
20,000
14,000
2,000
B
12,000
2,000
C
76,000
1,06,000
1,06,000
On 1st April, 2020, B retired from the firm on the following terms:
(a) Goodwill of the firm is to be valued at 14,000.
(b) Stock, Land and Building are to be appreciated by 10%.
(c) Plant and Machinery and Computer Printer are to be reduced by 10%.
(d) Sundry Debtors are considered to be good.
(e) There is a liability of 2,000 for the payment of outstanding salary to the employees of the firm. This
liability was not provided in the Balance Sheet but the same is to be recorded now.
(f) Amount payable to B is to be transferred to his Loan Account
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of A and C after
B's retirement
at 21st March 2020. They shared profits in the ratio​

Answer 1

Answer:

ANSWER

(i) REVALUATION A/C

Dr. Cr.

Particulars Amount Particulars Amount

To Provision for Doubtful Debts 1700 By Prepaid advertisement Expenses 1200

To A's Capital

(revenue expense) 2100 By B's Capital

(personal expenses) 2000

By Loss transferred to:

- A's Capital a/c

- B's Capital a/c

- C's Capital a/c

300

200

100

3800 3800

(ii) PARTNER'S CAPITAL A/C

Dr. Cr.

Particulars A B C D Particulars A B C D

To Revaluation a/c

(personal) 2000 By Balance b/d 60000 40000 40000

To Revaluation a/c

(loss) 300 200 100 By Cash a/c 40000

To Balance c/d 61800 37800 39900 50000 By Creditors 10000

By revaluation expenses 2100

62100 40000 40000 50000 62100 40000 40000 50000

(iii) BALANCE SHEET

Dr. Cr.

Liabilities Amount Assets Amount

Capital a/cs:

- A

- B

- C

- D

61800

57800

39900

50000 Land and Building 50000

Bills Payable 10000 Plant and Machinery 40000

Creditors 30000

(-) D's Capital (10000) 20000 Furniture 30000

Stock 20000

Prepaid Advertisement

Expenses 1200

Debtors 30000

(-) Provision for (1700)

Doubtful debts

(+) Bills receivable 4000

dishonoured 32300

Bills receivable 20000

Bank (10000+40000-4000) 46000

239500 239500