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M.58 Management Accounting (Section B)—ISC XII

BALANCE SHEET
(After Amal’s Retirement)
as at 31st March, 2020
Liabilities ` Assets `
Capital A/cs: Building 2,60,000
Bimal 4,00,000 Machinery 2,40,000
Kamal 3,00,000 7,00,000 Stock 1,00,000
Amal’s Loan A/c 2,00,000 Debtors 93,000
Workmen Compensation Claim 8,000 Cash at Bank (WN 4) 2,65,000
Creditors 50,000
9,58,000 9,58,000

Working Notes:

1. Accounting Entries for Bad Debts:
Date Particulars L.F. Dr. (`) Cr. (`)
Bad Debts A/c ...Dr. 17,000
To Debtors A/c 17,000

Provision for Doubtful Debts A/c ...Dr. 10,000
Revaluation A/c ...Dr. 7,000
To Bad Debts A/c 17,000
2
2. (i) Amal’s Share of Goodwill = ` 1,40,000 × = ` 40,000, which is contributed by Bimal and Kamal in their
gaining ratio. It is calculated as follows: 7

4 3 1 3 2 1
Bimal’s Gain = - = ; Kamal’s Gain = - =
7 7 7 7 7 7
11
Gaining Ratio of Bimal and Kamal = : or 1 : 1.
77
(ii) Thus, Bimal and Kamal will contribute for Amal’s share of goodwill = ` 40,000 × 1 = ` 20,000 each.
2
3. Calculation of Proportionate Capital of the remaining partners in the new firm:
Total Capital of the firm before the retirement of Amal = ` 7,00,000, which is contributed by Bimal and Kamal
in their new profit-sharing ratio, i.e, 4 : 3. Thus,
4
Bimal’s Capital in the new firm = ` 7,00,000 × = ` 4,00,000;
7
3
Kamal’s Capital in the new firm = ` 7,00,000 × = ` 3,00,000.
7
4. Dr. BANK ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 1,00,000 By Amal’s Capital A/c 50,000
To Bimal’s Capital A/c 1,05,000 By Balance c/d 2,65,000
To Kamal’s Capital A/c 1,10,000
3,15,000 3,15,000