Pankaj, Naresh and Saurabh are partners sharing profits in the ratio of 3:2:1. Naresh retired from the firm due to his illness. On that date the Balance Sheet of the firm was as follows:

Books of Pankaj, Naresh and Saurabh

 

Balance Sheet as on March 31, 2007

 

Liabilities

Amount Rs

Assets

Amount Rs

General Reserve

12,000

Bank

7,600

Sundry Creditors

15,000

Debtors

6,000

 

Bills Payable

12,000

Less: Provision for Doubtful Debt

(400)

5,600

Outstanding Salary

2,200

 

 

Provision for Legal Damages

6,000

Stock

9,000

Capitals:

 

Furniture

41,000

Pankaj

46,000

 

Premises

80,000

Naresh

30,000

 

 

 

Saurabh

20,000

96,000

 

 

 

1,43,200

 

1,43,200

 

 

 

 

             

Additional Information

(i) Premises have appreciated by 20%, stock depreciated by 10% and provision for doubtful debts was to be made 5% on debtors. Further, provision for legal damages is to be made for Rs 1,200 and furniture to be brought up to Rs 45,000*.

(The amount of Rs 450 that is being given in the book for furniture is a mistake, as it should be Rs 45,000)

(ii) Goodwill of the firm be valued at Rs 42,000.

(iii) Rs 26,000 from Naresh’s Capital account be transferred to his loan account and balance be paid through bank; if required, necessary loan may be obtained from Bank.

(iv) New profit sharing ratio of Pankaj and Saurabh is decided to be 5:1.

Give the necessary ledger accounts and balance sheet of the firm after Naresh’s retirement.

Revaluation Account

 

Dr.

Cr.

 

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

900

Premises

16,000

Provision for Legal Damages

1,200

Provision for Doubtful Debts

100

Profit transferred to Capital:

 

Furniture

4,000

Pankaj

9,000

 

 

 

Naresh

6,000

 

 

 

Saurabh

3,000

18,000

 

 

 

20,100

 

20,100

 

 

 

 

             

 

Parters’ Capital Accounts

 

Dr.

Cr.

 

Particulars

Pankaj

Naresh

Saurabh

Particulars

Pankaj

Naresh

Saurabh

Naresh’s Capital A/c

14,000

 

 

Balance b/d

46,000

30,000

20,000

Naresh’s Loan A/c

 

26,000

 

General Reserve

6,000

4,000

2,000

Bank

 

28,000

 

Revaluation (Profit)

9,000

6,000

3,000

Balance c/d

47,000

 

25,000

Pankaj’s Capital A/c

 

14,000

 

 

61,000

54,000

25,000

 

61,000

54,000

25,000

 

 

 

 

 

 

 

 

                   

 

Bank Account

 

Dr.

Cr.

 

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

7,600

Naresh’s Capital A/c

28,000

Bank Loan (Balancing Figure)

20,400

 

 

 

 

 

 

 

28,000

 

28,000

 

 

 

 

         

 

Balance Sheet as on March 31, 2007

 

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

15,000

Debtors

6,000

 

Bills Payable

12,000

Less: Provision for Doubtful Debts

300

5,700

Bank Loan/overdraft

20,400

Stock

8,100

Outstanding Salaries

2,200

Furniture

45,000

Provision for Legal Damages

7,200

Premises

96,000

Naresh’s Loan

26,000

 

 

Capitals:

 

 

 

Pankaj

47,000

 

 

 

Saurabh

25,000

72,000

 

 

 

1,54,800

 

1,54,800

 

 

 

 

             

 

 

  • 2
What are you looking for?