12th | Ts grewal 2021-2022 Question 51 to 53 | Retirement of a partner

Page No 6.70:

Question 51:

Following is the Balance Sheet of Kusum, Sneh and Usha as on 31st March, 2021, who have agreed to share profits and losses in proportion of their capitals:

 

 

Liabilities

 `

Assets

 `

Capital A/cs:

 

Land and Building

 4,00,000

Kusum

4,00,000

 

Machinery

6,00,000

Sneh

6,00,000

 

Closing Stock

2,00,000

Usha

4,00,000

14,00,000

Sundry Debtors

2,20,000

 

Employees' Provident Fund

70,000

Less: Provision for Doubtful Debts

20,000

 

Workmen Compensation Reserve            

30,000

Cash at Bank

 

2,00,000

Sundry Creditors

1,00,000

 

 

 2,00,000

 

 

 

 

 

 

16,00,000

 

 16,00,000

 

 

 

 

On 1st April, 2021, Kusum retired from the firm and the remaining partners decided to carry on the business. It was agreed to revalue the assets and reassess the liabilities on that date, on the following basis:
(a) Land and Building be appreciated by 30%.
(b) Machinery be depreciated by 30%.
(c) There were Bad Debts of  ` 35,000.
(d) The claim against Workmen Compensation Reserve was estimated at  ` 15,000.
(e) Goodwill of the firm was valued at  ` 2,80,000 and Kusum's share of goodwill was adjusted against the Capital Accounts of the continuing partners Sneh and Usha who have decided to share future profits in the ratio of 3 : 4 respectively.
(f) Capital of the new firm in total will be the same as before the retirement of Kusum and will be in the new profit-sharing ratio of the continuing partners.
(g) Amount due to Kusum be settled by paying  ` 1,00,000 in cash and balance by transferring to her Loan Account which will be paid later on.
Prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet of the new firm after Kusum's retirement.

 

Answer:

Revaluation Account

Dr.

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Machinery A/c

1,80,000

Land and Building A/c

1,20,000

Bad Debts A/c

(35,000 – 20,000)

15,000

Loss on Revaluation transferred to:

 

 

 

Kusum

21,429

 

 

 

Sneh

32,142

 

 

 

Usha

21,429

75,000

 

1,95,000

 

1,95,000

 

 

 

 

 


Partners’ Capital Account

Dr.

Cr.

Particulars

Kusum

Sneh

Usha

Particulars

Kusum

Sneh

Usha

Revaluation A/c (Loss)

21,429

32,142

21,429

Balance b/d

4,00,000

6,00,000

4,00,000

Usha’s Capital A/c

–

–

80,000

Workmen Compensation Fund

4,286

6,428

4,286

Bank A/c

1,00,000

–

–

Usha’s Capital A/c

80,000

–

–

Kusum’s Loan A/c

3,62,857

–

–

 

 

 

 

Balance c/d

–

5,74,286

3,02,857

 

 

 

 

 

4,84,286

6,06,428

4,04,286

 

4,84,286

6,06,428

4,04,286

Balance c/d

–

6,00,000

8,00,000

Balance b/d

–

5,74,286

3,02,857

 

 

 

 

Bank A/c (WN3)

–

25,714

4,97,143

 

–

6,00,000

8,00,000

 

–

6,00,000

8,00,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as at March 31, 2021

Liabilities

Amount

( `)

Assets

Amount

( `)

Creditors

1,00,000

Land & Building

5,20,000

Employee’s Provident Fund

70,000

Machinery (6,00,000 – 1,80,000)

4,20,000

Workmen’s Compensation Claim

15,000

Stock

2,00,000

Kusum’s Loan

3,62,857

Sundry Debtors (2,20,000 – 35,000)

1,85,000

Capital A/c :

 

Bank

6,22,857

Sneh

6,00,000

 

 

 

Usha

8,00,000

14,00,000

 

 

 

19,47,857

 

19,47,857

 

 

 

 

 

Working Notes

 

WN 1 Calculation of Gaining Ratio 


Old Ratio (Kusum, Sneh and Usha) = 2:3:2

New Ratio (Sneh and Usha) = 3:4

Gaining Ratio = New Ratio – Old Ratio

Sneh‘s share= 3/7-3/7=nil

Usha‘s share= 4/7-2/7=2/7


WN2 Adjustment of Goodwill


Total Goodwill of the Firm = 2,80,000

Kusum’s Share of Goodwill = 2,80,000×2/7=80,000

It is to be adjusted by the Gaining partners i.e. only by Usha

 

WN3 Adjustment of Capital

Tatal capital of the firm before kusum’s retirement =14,00,000

New Ratio (Sneh and Usha) = 3:4

Sneha‘s new captial= 14,00,000×3/7=6,00,000


Usha‘s new capital= 14,00,000×4/7=8,00,000

 

Particulars

Sneh

Usha

New Capital Balance

6,00,000

8,00,000

Adjusted Old Capital Balance

5,74,286

3,02,857

Cash brought in by the Partner

25,714

4,97,143

 

 

 

 

WN4

Cash at Bank A/c

Dr.

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Balance b/d

2,00,000

Kusum’s Capital A/c

1,00,000

Sneh’s Capital A/c

25,714

Balance c/d

6,22,857

Usha’s Capital A/c

4,97,143

 

 

 

7,22,857

 

7,22,857

 

 

 

 

 



Page No 6.71:

Question 52:

Lal, Bal and Pal are partners sharing profits in the ratio of 5 : 3 : 7. Lal retired from the firm. Bal and Pal decided to share future profits in the ratio of 2 : 3. The adjusted Capital Accounts of Bal and Pal showed balance of ` 49,500 and ` 1,05,750 respectively. The total amount to be paid to X is  ` 1,35,750. This amount is to be paid by Bal and Pal in a manner that their capitals become proportionate to their new profit-sharing ratio. Calculate the amount to be brought in or to be paid to partners. 

 

Answer:

New Capital = 49,500 + 1,05,750 + 1,35,750 = ` 2,91,000

Bal's New Capital=2,91,000×2/5=1,16,400

Pal's New Capital=2,91,000×3/5=1,74,600

Bal brings in ` 66,900 (1,16,400 – 49,500)

Pal brings in ` 68,850 (1,74,600 – 1,05,750)

 



Page No 6.71:

Question 53:

Balance Sheet of X, Y and Z who shared profits in the ratio of 5 : 3 : 2, as on 31st March, 2021 was as follows:

 

 

Liabilities

 `

Assets

 `

Sundry Creditors

39,750

Bank (Minimum Balance)

15,000

Employees' Provident Fund

5,250

Debtors

97,500

Workmen Compensation Reserve

22,500

Stock

82,500

Capital A/cs:

 

Fixed Assets

1,87,500

X 

1,65,000

 

 

 

Y

84,000

 

 

 

Z

66,000

3,15,000

 

 

 

3,82,500

 

3,82,500

 

 

 

 

 

    
Y retired on 1st April, 2021 and it was agreed that:
(i) Goodwill of the firm is valued at  ` 1,12,500 and Y's share of it be adjusted into the accounts of X and Z who are going to share future profits in the ratio of 3 : 2.
(ii) Fixed Assets be appreciated by 20%.
(iii) Stock be reduced to  ` 75,000.
(iv) Y be paid amount brought in by X and Z so as to make their capitals proportionate to their new profit-sharing ratio.
Prepare Revaluation Account, Capital Accounts of all partners and the Balance Sheet of the New Firm.

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Stock

7,500

Fixed Assets

37,500

Revaluation Profit

 

 

 

X’s Capital A/c

15,000

 

 

 

Y’s Capital A/c

9,000

 

 

 

Z’s Capital A/c

6,000

30,000

 

 

 

 

 

 

 

37,500

 

37,500

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

11,250

 

22,500

Balance b/d

1,65,000

84,000

66,000

Bank

 

1,33,500

 

General Reserve

11,250

6,750

4500

Balance c/d

2,20,500

 

1,47,000

Revaluation (Profit)

15,000

9,000

6,000

 

 

 

 

X’s Capital A/c

 

11,250

 

 

 

 

 

Z’s Capital A/c

 

22,500

 

 

 

 

 

Bank A/c

40,500

 

93,000

 

2,31,750

1,33,500

1,69,500

 

2,31,750

1,33,500

1,69,500

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2021

Liabilities

Amount

( `)

Assets

Amount

( `)

Sundry Creditors

39,750

Bank

15,000

Employees Provident Fund

5,250

Debtors

97,500

Capitals:

 

Stock

75,000

 X

2,20,500

 

Fixed Assets

2,25,000

 Z

1,47,000

72,000

 

 

 

4,12,500

 

4,12,500

 

 

 

 


Working Notes:
New Capital = 1,80,000 + 54,000 + 1,33,500 = ` 3,67,500

X's New Capital=3,67,500×3/5=2,20,500

Z's New Capital=3,67,500×2/5=1,47,500

X brings in ` 40,500 (2,20,500 – 1,80,000)

Z brings in ` ` 93,000 (1,47,500 – 54,000)