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Question -

Digvijay, Brijesh and Parakaram were partners in a firm sharing profits in the ratio of 2:2:1. Their Balance Sheet as on March 31, 2017 was as follows:

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

49,000

Cash

8,000

Reserves

18,500

Debtors

19,000

Digvijay’s Capital

82,000

Stock

42,000

Brijesh’s Capital

60,000

Buildings

2,07,000

Parakaram’s Capital

75,500

Patents

9,000

 

2,85,000

 

2,85,000

 

 

 

 
Brijesh retired on March 31, 2017 on the following terms:
(i)    Goodwill of the firm was valued at Rs 70,000 and was not to appear in the books.
(ii)   Bad debts amounting to Rs 2,000 were to be written off.
(iii)  Patents were considered as valueless.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of Digvijay and Parakaram after Brijesh’s retirement.



Answer -


 Books of Digvijay and Parakaram 

Revaluation Account

 

Dr.

 

Cr.

 

Particular

Amount

Rs

Particular

Amount

Rs

Bad Debts

2,000

 

 

Patents

9,000

Loss transferred to Capital Account:

 

 

 

Digvijay

4,400

 

 

Brijesh

4,400

 

 

Parakaram

2,200

 

 

 

 

 

11,000

 

11,000

 

 

 

 

 

 

 

 

 

 

 

 

Partners’ Capital Account

 

Dr.

 

Cr.

 

Particularss

Digvijay

Brijesh

Parakaram

Particularss

Digvijay

Brijesh

Parakaram

Brijesh’s Capital A/c

18,667

 

9,333

Balance b/d

82,000

60,000

75,500

Revaluation (Loss)

4,400

4,400

2,200

Digvijay’s Capital A/c

 

18,667

 

Brijesh’s Loan

 

91,000

 

Parakaram’s Capital A/c

 

9,333

 

Balance c/d

66,333

 

67,667

Reserves

7,400

7,400

3,700

 

89,400

95,400

79,200

 

89,400

95,400

79,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet as on March 31, 2017 

 

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

49,000

Cash

8,000

Brijesh’s Loan

91,000

Debtors

19,000

 

 

 

Less: Bad Debts

2,000

17,000

Digvijay’s Capital A/c

66,333

Stock

42,000

Parakaram’s Capital A/c

67,667

Buildings

2,07,000

 

2,74,000

 

2,74,000

 

 

 

 
Note: As sufficient balance is not available to pay the amount due to Brijesh, the balance of his Capital Account transferred to his Loan Account.
 Working Note:
1. Brijesh’s Share of Goodwill
Total goodwill of the firm  Retiring Partner’s Share  
 2. Gaining Ratio = New Ratio – Old Ratio
 Digvijay’s Share 
 Parakaram’s Share 
 Gaining ratio between Digvijay and Parakaram = 4 : 2 or 2 : 1

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