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4.32 Double Entry Book Keeping (Section A)—ISC XII

3. Dr. BANK ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 29,000 By Vicky’s Drawings A/c 25,000
To Investment A/c 21,000 By Vicky’s Executor’s A/c 24,000
By Balance c/d 1,000
50,000 50,000

Illustration 18.
Ansh, Vansh and Dev are in partnership sharing profits and losses in the ratio of 3 : 2 : 1.

BALANCE SHEET OF Ansh, Vansh AND Dev
as at 31st March, 2019

Liabilities ` Assets `
Capital A/cs: Machinery at cost 50,000
Ansh 80,000 Less: Provision for Depreciation 8,000 42,000
Vansh 60,000 Furniture 1,000
Dev 40,000 1,80,000 Sundry Debtors 80,000
Reserve 24,000 Less: Provision for Doubtful Debts 3,000 77,000
Workmen Compensation Reserve 6,000 Stock 50,000
Sundry Creditors 60,000 Cash at Bank 1,00,000
2,70,000 2,70,000

On 30th June, 2019, Vansh retired and Ansh and Dev continued in partnership, sharing
profits and losses in the ratio of 3 : 2. It was agreed that the following adjustments
were to be made in the Balance Sheet as at 30th June, 2019:
(i) Machinery was to be revalued at ` 45,000.
(ii) Stock was to be reduced by 2%.

(iii) Furniture was to be reduced to ` 600.
(iv) Provision for Doubtful Debts to be increased by ` 1,000.
(v) A Provision of ` 300 was to be created for Outstanding Expenses.
The partnership agreement provided that on the retirement of a partner, goodwill was
to be valued at ` 24,000 and Vansh’s share of the same was to be adjusted into the
accounts of Ansh and Dev. The profits up to the date of retirement from the date of
last Balance Sheet was estimated at ` 45,000. All the partners are to be credited with
their respective share of profit earned till the date of retirement of Vansh.
Vansh was to be paid in full. Ansh and Dev were to bring sufficient amount so as
to make their capitals in proportion to the new profit-sharing ratio, subject to the
condition that a cash balance of ` 30,000 was to be maintained as working capital.
Before making this adjustment the cash balance was ` 68,000 on 30th June, 2019.
Pass necessary Journal entries to give effect to the above arrangements and prepare
Partners’ Capital Accounts as on 30th June, 2019.