Question

Y retired on 1st April, 2018 on the following terms:
(a) Goodwill of the firm was valued at ₹ 70,000 and was not to appear in the books.
(b) Bad Debts amounted to ₹ 2,000 were to be written off.
(c) Patents were considered as valueless.
Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of X and Z after Y’s retirement.

Answer 1

Answer:

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Answer 2

Working Notes:

Adjustment of Goodwill

Goodwill of the firm = Rs. 70,000

Y's retired in the firm.

$\text { Y's Goodwill }=70,000 \times \frac{2}{5}=28,000$

Y's share of goodwill is to be distributed by X and Z = 2 : 1 (Gaining Ratio)

$\text{X's Share of Goodwill} =28,000 \times \frac{2}{3}=18,667 \\ \\\text{Z's Share of Goodwill} =28,000 \times \frac{1}{3}=9,333$