Q 108. Anand, Bihari and Shivin are equal partners in a firm. Bihari retires and his claim including his capital and his share of goodwill is Rs. 40,000. He is paid in kind, a vehicle valued at Rs 20,000 which is unrecorded in the books of the firm till the date of retirement and the balance in cash. 
You are required to give the journal entries for recording the payment to Bihari in the books of the firm. 

Dear Student


Assuming that unrecorded vehicle wasn't recorded in the books of account on the date of retirement and as a result, it wasn't used is calculation of revaluation profit to arrive at Correct claim of Bihari, Therefore it shall be first recorded in the books and revaluation profit shall be calculated and then final payment would be made as follows :
 
Journal
Date Particulars    Debit   Credit 
         
  Vehicle A/c Dr.               20,000  
    To Revaluation A/c                   20,000
  (Being unrecorded veicle recorded on the date of retirement of Bihari)      
         
  Revaluation A/c Dr.               20,000  
    To Anand's Capital A/c                     6,667
    To Bihari's Capital A/c                     6,667
    To Shivin's Capital A/c                     6,666
  (Being the profit due to unrecorded asset is transferred to capital account of the partners)      
         
  Bihari's Capital A/c (40,000 + profit due to unrecorded asset) Dr.               46,667  
    To Vehicle                    20,000
    To Cash A/c                   26,667
  (Being bihari on retirement was given vehicle and cash)      


Regards

  • 8

bihar capital a/c         Dr 40000
   to vechicle a/c                               20000
   to cash a/c                                 20000
  • -3
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