Page 144 - DEBKVOL-1

Chapter 6 Retirement of a Partner 6.11
.
Investment A/c ...Dr. 5,000
To Revaluation A/c 5,000
(Value of Investment brought up to market value)
Revaluation A/c ...Dr. 5,000
To A’s Capital A/c 2,500
To B’s Capital A/c 1,500
To C’s Capital A/c 1,000
(Transfer of gain (profit) on revaluation)
Bank A/c ...Dr. 50,000
To D’s Capital A/c 50,000
(Capital brought in by D)

Illustration 10. (Admission-cum-Retirement: Distribution of Profits).
Harsh, Rajneesh and Nikhil were partners sharing profits in the ratio of 6 : 4 : 5. On 1st April,
2017. Nikhil retires from the firm and on the same date Deepanshu is admitted into partnership
for 2/9th share in profits. Harsh, Rajneesh and Deepanshu decided to share future profits in
the ratio 4 : 3 : 2. They earned profit of ` 9,00,000 for the year ended 31st March, 2018. Pass
necessary Journal entry.
Solution: In the Books of Harsh, Rajneesh and Deepanshu
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2018
April 1 Profit and Loss Appropriation A/c ...Dr. 9,00,000
To Harsh’s Capital A/c 4,00,000
To Rajneesh’s Capital A/c 3,00,000
To Deepanshu’s Capital A/c 2,00,000
(Profit for the year ended 31st March, 2018 distributed among
partners including new partner in the ratio of 4 : 3 : 2)

Illustration 11. (Admission-cum-Retirement: Treatment of Existing Goodwill).

A, B and C were partners sharing profit equally. On 31st March, 2018, D was admitted into the firm
for 1/6th share in profits and on the same date B retires from the firm. On that date, goodwill
appears in the books at ` 30,000. Pass necessary Journal entry.

Solution: In the Books of A, B, C and D
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2018
Mar 31 A’s Capital A/c ...Dr. 10,000
B’s Capital A/c ...Dr. 10,000
C’s Capital A/c ...Dr. 10,000
To Goodwill A/c 30,000
(Existing goodwill appearing in the books written off by debiting old
partners in old ratio)