Digvijay, Brijeshand Parakaram were partners in a firm sharing profits in the ratio of 2:2:1.Their Balance Sheet as on March 31, 2007 was as follows:
Liabilities
Amount
Rs
Assets
Amount
Rs
Creditors
49,000
Cash
8,000
Reserves
18,500
Debtors
19,000
Digvijay’s Capital
82,000
Stock
42,000
Brijesh’s Capital
60,000
Buildings
2,07,000
Parakaram’s Capital
75,500
Patents
9,000
2,85,000
2,85,000
Brijesh retired onMarch 31, 2007 on the following terms:
(i) Goodwill of the firm was valued at Rs70,000 and was not to appear in the books.
(ii) Bad debts amounting to Rs 2,000 were to bewritten off.
(iii) Patents were considered as valueless.
Prepare RevaluationAccount, Partners’ Capital Accounts and the Balance Sheet of Digvijay andParakaram after Brijesh’s retirement.
Digvijay, Brijeshand Parakaram were partners in a firm sharing profits in the ratio of 2:2:1.Their Balance Sheet as on March 31, 2007 was as follows:
Liabilities | Amount Rs | Assets | Amount Rs |
Creditors | 49,000 | Cash | 8,000 |
Reserves | 18,500 | Debtors | 19,000 |
Digvijay’s Capital | 82,000 | Stock | 42,000 |
Brijesh’s Capital | 60,000 | Buildings | 2,07,000 |
Parakaram’s Capital | 75,500 | Patents | 9,000 |
| 2,85,000 |
| 2,85,000 |
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Brijesh retired onMarch 31, 2007 on the following terms:
(i) Goodwill of the firm was valued at Rs70,000 and was not to appear in the books.
(ii) Bad debts amounting to Rs 2,000 were to bewritten off.
(iii) Patents were considered as valueless.
Prepare RevaluationAccount, Partners’ Capital Accounts and the Balance Sheet of Digvijay andParakaram after Brijesh’s retirement.
Books of Digvijay and Parakaram
Revaluation Account |
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Dr. |
| Cr. |
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Particular | Amount Rs | Particular | Amount Rs | |||
Bad Debts | 2,000 |
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Patents | 9,000 | Loss transferred to Capital Account: |
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| Digvijay | 4,400 | |||
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| Brijesh | 4,400 | |||
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| Parakaram | 2,200 | |||
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| 11,000 |
| 11,000 | |||
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Partners’ Capital Account |
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Dr. |
| Cr. |
| |||||||
Particularss | Digvijay | Brijesh | Parakaram | Particularss | Digvijay | Brijesh | Parakaram | |||
Brijesh’s Capital A/c | 18,667 |
| 9,333 | Balance b/d | 82,000 | 60,000 | 75,500 | |||
Revaluation (Loss) | 4,400 | 4,400 | 2,200 | Digvijay’s Capital A/c |
| 18,667 |
| |||
Brijesh’s Loan |
| 91,000 |
| Parakaram’s Capital A/c |
| 9,333 |
| |||
Balance c/d | 66,333 |
| 67,667 | Reserves | 7,400 | 7,400 | 3,700 | |||
| 89,400 | 95,400 | 79,200 |
| 89,400 | 95,400 | 79,200 | |||
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Balance Sheet as on March 31, 2007
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Liabilities | Amount Rs | Assets | Amount Rs | ||
Creditors | 49,000 | Cash | 8,000 | ||
Brijesh’s Loan | 91,000 | Debtors | 19,000 |
| |
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| Less: Bad Debts | 2,000 | 17,000 | |
Digvijay’s Capital A/c | 66,333 | Stock | 42,000 | ||
Parakaram’s Capital A/c | 67,667 | Buildings | 2,07,000 | ||
| 2,74,000 |
| 2,74,000 | ||
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Note: As sufficient balance is not available to paythe amount due to Brijesh, the balance of his Capital Account transferred tohis Loan Account.
Working Note:
1. Brijesh’s Share of Goodwill
Total goodwill of the firm ´Retiring Partner’s Share
2. Gaining Ratio = New Ratio – Old Ratio
Digvijay’s Share
Parakaram’s Share
Gaining ratio between Digvijay and Parakaram = 4 : 2 or 2 :1