Question

Ashok, Bhaskar and Chaman are partners in a firm, sharing profits and losses as Ashok 1/3, Bhaskar 1/2, and
Chaman 1/6 respectively. The Balance Sheet of the firm as at 31st March, 2020 was:
Chapter 6. Retirement of a Partner 6.59
BA
abilities
₹
Assets
zpital A/cs:
₹
Ahok
3,00,000
4,00,000
2,50,000
Bhaskar
Chaman
General Reserve
Sundry Creditors
Loan Payable
9,50,000
2,20,000
2,50,000
1,50,000
Building
Plant and Machinery
Furniture
Stock
Debtors
Less: Provision for Doubtful Debts
Cash in Hand
Advertisement Suspense Account
5,00,000
4,00,000
1,00,000
2,50,000
1,80,000
5,000 1,75,000
85,000
60,000
15,70,000
15,70,000
Chaman retired on 1st April, 2020 subject to the following adjustments:
(a) Goodwill of the firm be valued at 2,40,000. Chaman's share of goodwill be adjusted into the Capital
Accounts of Ashok and Bhaskar who will share future profits in the ratio of 3:2.
(b) Plant and Machinery to be reduced by 10% and Furniture by 5%.
(c) Stock to be increased by 15% and Building by 10%.
(d) Provision for Doubtful Debts to be raised to *20,000.
Pass Journal entries to record the above transactions in the books of the firm and show the Profit and
Loss Adjustment Account, Capital Account of Chaman and the Balance Sheet of the firm after Chaman's
retirement.
Income in the ratio of 3:2:1. On 1st April, 2020,​

Answer 1

Preparing Profit and  Loss Adjustment Account, Capital Account of Chaman and the Balance Sheet of the firm and Showing Journal entries

Explanation:

Working Notes:

Old Ratio of Ashok : Bhaskar : Chaman = $\frac{1}{3} : \frac{1}{2} : \frac{1}{6}$

                                                              0r 2 : 3: 1

New ratio of Ashok and Bhaskar= 3 : 2

Gaining ratio= New ratio – old ratio

Ashok = $\frac{3}{5} - \frac{2}{6} = \frac{8}{30}$

Bhaskar = $\frac{2}{5} - \frac{3}{6} =- \frac{3}{30}$

Goodwill of firm= 2,40,000  

Bhaskar will get =2,40,000 × $\frac{3}{30}$

                          = 24,000

Chaman’s share of goodwill = 2,40,000 × $\frac{1}{6}$

                                               = 40,000

⇒ Ashok will give Bhaskar and Chaman 24,000, 40,000 respectively.

Pls refer to the pic attached below