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6.6 Double Entry Book Keeping—CBSE XII
B retires on 1st April, 2018 on the following terms:
(i) Provision for Doubtful Debts be raised by ` 2,000.

(ii) Outstanding Claim for Damages of ` 2,200 be provided.
(iii) Creditors be reduced by ` 12,000.
(iv) Goodwill of the firm be valued at ` 45,000. Goodwill not to appear in books.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of A and C.
(AI 1999 C, Delhi 2002 C, Modified)
Solution:

Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Provision for Doubtful Debts A/c 2,000 By Creditors A/c 12,000
To Outstanding Claim for Damages A/c 2,200
To Gain (Profit) on Revaluation transferred to:
A’s Capital A/c 3,900
B’s Capital A/c 2,600
C’s Capital A/c 1,300 7,800
12,000 12,000

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars A (`) B (`) C (`) Particulars A (`) B (`) C (`)

To Goodwill A/c (Note 1) 10,500 7,000 3,500 By Balance b/d 80,000 80,000 60,000
To B’s Capital A/c 11,250 ... 3,750 By General Reserve A/c 12,000 8,000 4,000
To B’s Loan A/c ... 98,600 ... By Revaluation A/c—Gain 3,900 2,600 1,300
To Balance c/d 74,150 ... 58,050 By A’s Capital A/c ... 11,250 ...
By C’s Capital A/c ... 3,750 ...
95,900 1,05,600 65,300 95,900 1,05,600 65,300

BALANCE SHEET OF A AND C as at 1st April, 2018
Liabilities ` Assets `
Bills Payable 32,000 Cash 36,000
Creditors 48,000 Stock 36,000
Outstanding Claim for Damages 2,200 Debtors 50,000
B’s Loan A/c 98,600 Less: Provision for Doubtful Debts 9,000 41,000
Capital A/cs: Furniture 60,000
A 74,150 Machinery 1,40,000
C 58,050 1,32,200
3,13,000 3,13,000

Notes: 1. The existing goodwill is written off in the old ratio.
2. B’s share of Goodwill = ` 45,000 × 2/6 = ` 15,000 will be contributed by A and C in their gaining ratio,
i.e., 3 : 1. Thus,
A’s contribution for B’s Goodwill = ` 15,000 × 3/4 = ` 11,250 and
C’s contribution for B’s Goodwill = ` 15,000 × 1/4 = ` 3,750.