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Question
Banwari, Girdhari and Murari are partners in a firm sharing profits and losses in the ratio of 4: 5: 6. On 31st March 2014, Girdhari retired. On that date, the capitals of Banwari, Girdhari and Murari before the necessary adjustments stood at Rs 2,00,000, Rs 1,00,000 and Rs 50,000 respectively. On Girdhari's retirement, goodwill of the firm was valued at Rs 1,14,000. Revaluation of assets and re-assessment of liabilities resulted in a profit of Rs 6,000. General Reserve stood in the books of the firm at Rs 30,000.
The amount payable to Girdhari was transferred to his loan account. Banwari and Murari agreed to pay Girdhari two yearly instalments of Rs 75,000 each including interest @ 10% p.a. on the outstanding balance during the first two years and the balance including interest in the third year. The firm closes its books on 31st March every year.
Prepare Girdhari's loan account till it is finally paid showing the working notes clearly.
Solution
Capital of Girdhari = Rs 1,00,000
Girdhari's Share of Goodwill = `114000 xx 5/15 = 38000`
Girdhari's Share in Revaluation Profit = `6000 xx 5/15 = 2000`
Girdhari's Share in General Reserve = `30000 xx 5/15 = 10000`
Total Amount Payable to Girdhari = Rs 1,00,000 + rs 38,000 + Rs 2,000 + Rs 10,000 = Rs 1,50,000
|
In books of Banwari & Murari Girdhari's Loan Account |
|||||
| Dr. | Cr. | ||||
| Date | Particulars | Rs | Date | Particulars | Rs |
|
2015 March 31 March 31 |
To Cash and Bank A/c To Balance c/d |
75,000 90,000 |
2014 April 1 2015 March 31 |
By Girdhari's Capital A/c By Interest A/c
|
1,50,000 15,000 |
| 1,65,000 | 1,65,000 | ||||
|
2016 March 31 March 31
|
To Cash and Bank A/c To Balance c/d
|
75,000 24,000
|
2015 April 1 2016 March 31 |
By Balance b/d
By Interest A/c |
90,000
9,000 |
| 99,000 | 99,000 | ||||
|
2016 March 31
|
To Cash and Bank A/c
|
26,400
|
2016 April 1 2016 March 31 |
By Balance b/d
By Interest A/c |
24,000
2,400 |
| 26,400 | 26,400 | ||||
Working Notes:
1) Interest for Year 1 = `150000 xx 10/100 = 15000`
2) Interest for Year 2 = `90000 xx 10/100 = 9000`
3) Interest for Year 1 = `24000 xx 10/100 = 2400`
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| Balance sheet as on 31st March 2013 | |||
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