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Ram, Shyam and Mohan are partners sharing profits in the ratio of 5 : 3 : 2. Mohan retired on 1st April, 2023 from business. The Balance Sheet stood as at 31st March, 2023 as under:

Liabilities Assets

Trade Creditors

Bills Payable

General Reserve

Workmen Compensation Reserve

Capital A/cs:

Ram

Shyam

Mohan

1,98,000

92,500

1,00,000

67,500

4,00,000

6,00,000

2,00,000

Cash

Bank

Sundry Debtors

Stock

Furniture

Computers

Plant and Machinery

Land and Building

Investments

85,000

1,31,500

3,40,000

1,81,000

1,82,500

1,32,000

2,02,300

2,60,000

1,43,700

  16,58,000   16,58,000

(i) The assets on Mohan’s retirement are to be revalued as follows:

Stock 2,00,000
Plant and Machinery 2,35,300
Land and Building 2,00,000
Furniture 1,42,500

(ii) A sum of ₹ 17,000 is to be written off from Sundry Debtors.

(iii) Goodwill of the firm be valued t ₹ 90,000 and Mohan’s share in it be adjusted into the Capital Accounts of Ram and Shyam.

The continuing partners agreed to pay ₹ 1,65,000 on retirement of Mohan, to be contributed by the continuing partners in their new profit sharing ratio which is 3 : 2. The balance in the Capital Account of Mohan is to be taken as Loan.

Give Journal entries, prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of reconstituted firm.

Anurag Pathak Changed status to publish March 3, 2024
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