X.Y and Z are in partners sharing profits in the ratio of 5:3:2.Their balance sheet on 1.1.10 the yY decided to retire was as follows:-
LIABILITIES ASSET
X's capital 30000 Building 25000
Y's capital 20000 Plant and Machinery 15000
Z's capital 20000 Investment 10000
General Reserve 10000 Joint Life Policy 15000
creditors 7000 Debtors 10000
Bills Payable 3000 Stock 5000
Cash 10000
90000 90000
the terms of retirement are:-
(a)Y sells share of goodwill to X for Rs.8000 and to Z for Rs.4000
(b)Stock to be appreciated by 20% and building by 5000
(c)J.L.P was surrendered to the insurance co. for Rs.7000 and investment were sold for 22000
(d)Y is paid off in cash
prepare revaluation a/c,capital a/c of partners and balance sheet.
Revaluation Account | ||||
Dr. | Cr. | |||
Particulars | Amount Rs | Particulars | Amount Rs | |
Joint Life Policy (15,000 – 7,000) | 8,000 | Stock | 1,000 | |
Profit on revaluation transferred to: |
| Building | 5,000 | |
X’s Capital A/c | 5,000 |
| Investment | 12,000 |
Y’s Capital A/c | 3,000 |
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Z’s Capital A/c | 2,000 | 10,000 |
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| 18,000 |
| 18,000 | |
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Partners’ Capital Account | |||||||
Dr. | Cr. | ||||||
Particulars | X | Y | Z | Particulars | X | Y | Z |
Y’s Capital A/c (Goodwill) | 8,000 |
| 4,000 | Balance b/d | 30,000 | 20,000 | 20,000 |
Cash A/c |
| 38,000 |
| General Reserve | 5,000 | 3,000 | 2,000 |
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| X’s Capital A/c (Goodwill) |
| 8,000 |
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| Z’s Capital A/c (Goodwill) |
| 4,000 |
|
Balance c/d | 32,000 |
| 20,000 | Revaluation (Profit) | 5,000 | 3,000 | 2,000 |
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| 40,000 | 38,000 | 24,000 |
| 40,000 | 38,000 | 24,000 |
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Balance Sheet | |||
Liabilities | Amount Rs | Assets | Amount Rs |
Capital A/cs : |
| Building (25,000 + 5,000) | 30,000 |
X | 32,000 | Plant and Machinery | 15,000 |
Z | 20,000 | Debtors | 10,000 |
Creditors | 7,000 | Stock (5,000 + 1,000) | 6,000 |
Bills Payable | 3,000 | Cash (WN) | 1,000 |
| 62,000 |
| 62,000 |
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Working Notes
Cash Account | ||||
Dr. | Cr. | |||
Particulars | Amount Rs | Particulars | Amount Rs | |
Balance b/d | 10,000 | Y’s Capital A/c | 38,000 | |
Joint Life Policy | 7,000 | Balance c/d | 1,000 | |
Investments | 22,000 |
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| 39,000 |
| 39,000 | |
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