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Chapter 6 Retirement of a Partner 6.19
.
BALANCE SHEET OF X AND Z as at 1st April, 2018
Liabilities ` Assets `
Bills Payable 2,500 Cash at Bank 1,250
Creditors 9,500 Stock 15,000
Provision for Workmen Compensation 825 Debtors 8,000
Y’s Loan A/c 20,200 Less: Provision for Doubtful Debts 1,225 6,775
Capital A/cs: Delivery Vans 3,400
X 22,400 Machinery 15,750
Z 11,500 33,900 Building 24,750
66,925 66,925

Notes: 1. The question is silent in respect of payment to Y. Therefore, the amount due to Y has been transferred
to his Loan Account.
1
2. Y’s share of goodwill = ` 9,000 × = ` 3,000, which is to be contributed by X and Z in their gaining
3
ratio, i.e., 3 : 7. Thus, X and Z will be debited by ` 900 and ` 2,100 respectively.
3. Calculation of Gaining Ratio:

-
3 1 65 1 3
X’s Gain = - = = or ;
5 2 10 10 30
2 1 12 - 5 7
Z’s Gain = - = = ◊ Thus, Gaining Ratio of X and Z = 3 : 7.
5 6 30 30
Illustration 18.
A, B and C are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 31st March, 2018,
the Balance Sheet of the firm stood as:

BALANCE SHEET
Liabilities ` Assets `
Creditors 1,35,900 Cash 47,000
Capital A/cs: Debtors 80,000
A 1,50,000 Stock 1,16,900
B 1,00,000 Building 2,30,000
C 1,00,000 3,50,000 Profit and Loss A/c 12,000
4,85,900 4,85,900
B retired on the above mentioned date on the following terms:
(i) Building to be appreciated by ` 70,000.

(ii) Provision for Doubtful Debts to be made @ 5% on Debtors.
(iii) Goodwill of the firm is valued at ` 1,80,000 and adjustment in this respect to be made in
the continuing partners’ Capital Accounts without raising the Goodwill Account.
(iv) ` 30,000 to be paid to B immediately and the balance in his Capital Account to be
transferred to his Loan Account.
Prepare Revaluation Account, Partners’ Capital Accounts, Cash Account and the Balance Sheet
of the firm after B’s retirement.