Question

X,Y and Z were partners in a firm sharing profits in 5:3:2 ratio. On 31st March, 2016 Z retired from the

firm. On the date of Z’s retirement the Balance Sheet of the firm was as follows:

Balance Sheet of X,Y and Z

As at 31st March, 2016

Liabilities Rs Assets Rs

Creditors

Bills Payable

Outstanding Rent

Provision for Legal Claims

Capital A/cs:

X 1,27,000

Y 90,000

Z 71,000

27,000

13,000

22,500

57,500

2,88,000

4,08,000

Bank

Debtors 20,000

Less: Provision for

doubtful debts 500

Stock

Furniture

Land and Building

80,000

19,500

21,000

87,500

2,00,000

4,08,000

On Z’s retirement it was agreed that:

i) Land and Building will be appreciated by 5% and furniture will be depreciated by 20%.

ii) Provision for doubtful debts will be made at 5% on debtors and provision for legal claims will be made

Rs60,000.

iii) Goodwill of the firm was valued at Rs60,000.

iv) Rs70,000 from Z’s Capital Account will be transferred to his loan account and the balance will be paid to

him by cheque.

Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of X and Y after Z’s retirement.no​

Answer 1

Answer:

Here's the answer of the given question.

Answer 2

Answer:

The Revaluation Account, Partner's Capital Accounts and Balance Sheet of X and Y after Z's retirement are all demonstrated in the attached images.

Explanation:

i) The profits are shared between X,Y and Z were shared in the ratio of 5:3:2.

ii) Land and building is appreciated by 5%.

Hence, land and building appreciated by = 2,00,000 x 5% = Rs 10,000

iii) Furniture is depreciated by 20%.

Furniture depreciated by = 87,500 x 20% = Rs 17,500

iv) Goodwill of the firm = Rs 60,000

Z's share of Goodwill = 60,000 x (2/10) = Rs 12,000

Adjustment of Goodwill for X = 12,000 x (5/8) = Rs 7,500

Adjustment of Goodwill for Y = 12,000 x (3/8) = Rs 4,500

v) The accounts are demonstrated in attached images.

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