Page 93 - MA-12

Retirement and Death of a Partner 4.23

Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `

To Provision for Doubtful Debts A/c 8,000 By Stock A/c 15,000
To Cash A/c 5,000 By Building A/c 23,000
(Revaluation Expenses) By B’s Capital A/c 55,000
To Gain (Profit) transferred to: (Gain on Car)
A’s Capital A/c 40,000
B’s Capital A/c 30,000
C’s Capital A/c 10,000 80,000
93,000 93,000

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars A (`) B (`) C (`) Particulars A (`) B (`) C (`)
To B’s Capital A/c 36,000 ... 45,000 By Balance b/d 2,00,000 3,00,000 2,00,000
(WN 1) By General Reserve A/c 40,000 30,000 10,000
To Car A/c ... 2,50,000 ... By A’s Capital A/c ... 36,000 ...
To Revaluation A/c 55,000 (WN 1)
To Output CGST A/c 27,450 By C’s Capital A/c ... 45,000 ...
To Output SGST A/c 27,450 (WN 1)
To Bank A/c ... 42,050* ... By Revaluation A/c 40,000 30,000 10,000
To B’s Loan A/c ... 42,050* ... By Workmen Compen-
To Balance c/d (WN 2) 4,00,000 ... 2,00,000 sation Reserve A/c 4,000 3,000 1,000
By Bank A/c (Bal. Fig.) 1,52,000 ... 24,000
4,36,000 4,44,000 2,45,000 4,36,000 4,44,000 2,45,000
*50% of ` 84,100, i.e., Amount due to B.
BALANCE SHEET as at 1st April, 2018 (After B’s Retirement)
Liabilities ` Assets `

Creditors 1,40,000 Cash in Hand 14,100
Bills Payable 30,000 Cash at Bank 2,83,950
Output CGST 27,450 Input CGST 450
Output SGST 27,450 Input SGST 450
Workmen Compensation Claim 12,000 Stock 90,000
B’s Loan 42,050 Debtor 1,30,000
Capital A/cs: Less: Provision for Doubtful Debts 13,000 1,17,000
A 4,00,000 Plant and Machinery 1,20,000
C 2,00,000 6,00,000 Building 2,53,000
8,78,950 8,78,950

Working Notes:
1. B sold his share to A and C in the ratio of 4 : 5. The consideration of ` 36,000 and ` 45,000 will be credited to
B’s Capital Account and the respective amount will be debited to A’s and C’s Capital Accounts respectively.
2. Total Capital of the New Firm is ` 6,00,000. New Profit-sharing Ratio is 2 : 1.
A’s Share of Capital = ` 6,00,000 × 2/3 = ` 4,00,000
C’s Share of Capital = ` 6,00,000 × 1/3 = ` 2,00,000
After all adjustments, A’s Capital will be ` (2,00,000 + 40,000 + 40,000 + 4,000 – 36,000) = ` 2,48,000.
Therefore, A will bring in (` 4,00,000 – ` 2,48,000) = ` 1,52,000.
After all adjustments, C’s Capital will be ` (2,00,000 + 10,000 + 10,000 + 1,000 – 45,000) = ` 1,76,000.
Therefore, C will bring in (` 2,00,000 – ` 1,76,000) = ` 24,000.