Question

X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2. Z retires and on the date of his retirement, the following adjustments were agreed upon:
(a) The value of Furniture is to be increased by ₹ 12,000.
(b) The value of stock to be decreased by ₹ 10,000.
(c) Machinery of the book value of ₹ 50,000 is to be depreciated by 10%.
(d) A Provision for Doubtful Debts @ 5% is to be created on debtors of book value of ₹ 40,000.
(e) Unrecorded Investment worth ₹ 10,000.
(f) An item of ₹ 1,000 included in bills payable is not likely to be claimed, hence should be written back.
Pass necessary journal entries.

Answer 1

X’s Capital A/c 3,000

Y’s Capital A/c  1,800

Z’s Capital A/c  1,200

Revaluation profit transferred to Partners’ Capital Accounts.