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Chapter 6 Retirement of a Partner 6.5
.
Illustration 4.
(a) Give the Journal entry to distribute ‘Workmen Compensation Reserve’ of ` 70,000 at the
time of retirement of Neeti, when there is a claim of ` 25,000 against it. The firm has three
partners Raveena, Neeti and Rajat. (Delhi 2013)
(b) Give the Journal entry to distribute ‘Workmen Compensation Reserve’ of 60,000 at the
time of retirement of Sajjan, when there is no claim against it. The firm has three partners
Rajat, Sajjan and Kavita. (AI 2013)
(c) Give the Journal entry to distribute ‘Investment Fluctuation Reserve’ of ` 4,000 at the time
of retirement of Z, when investments (market value ` 19,000) appears at ` 20,000. The firm
has three partners X, Y, and Z. (CBSE 2013)
Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
(a) Workmen Compensation Reserve A/c ...Dr. 70,000
To Raveena’s Capital A/c 15,000
To Neeti’s Capital A/c 15,000
To Rajat’s Capital A/c 15,000
To Workmen Compensation Claim A/c 25,000
(Workmen Compensation Reserve after adjusting claim credited to
Partners’ Capital Accounts in their old ratio)
(b) Workmen Compensation Reserve A/c ...Dr. 60,000
To Rajat‘s Capital A/c 20,000
To Sajjan’s Capital A/c 20,000
To Kavita’s Capital A/c 20,000
(Workmen Compensation Reserve transferred to Partners’ Capital Accounts
in their old ratio)
(c) Investment Fluctuation Reserve A/c ...Dr. 4,000
To X‘s Capital A/c 1,000
To Y‘s Capital A/c 1,000
To Z‘s Capital A/c 1,000
To Investments A/c 1,000
(Value of Investments brought down to market value and surplus Investment
Fluctuation Reserve transferred to Partners’ Capital Accounts in their
old profit-sharing ratio)
Illustration 5 (Treatment of Goodwill and Revaluation of Assets and Reassessment of Liabilities;
Amount due to Retiring Partner be Treated as Loan).
A, B and C share profits and losses in the ratio of 3 : 2 : 1. Their Balance Sheet as at 31st March,
2018 was as follows:
Liabilities ` Assets `
Creditors 60,000 Cash 36,000
Bills Payable 32,000 Debtors 50,000
General Reserve 24,000 Less: Provision for Doubtful Debts 7,000 43,000
Capital A/cs: Stock 36,000
A 80,000 Furniture 60,000
B 80,000 Machinery 1,40,000
C 60,000 2,20,000 Goodwill 21,000
3,36,000 3,36,000