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Question
Kavin, Madhan, and Ranjith are partners sharing profits and losses in the ratio of 4:3:3 respectively. Kavin retires from the firm on 31st December 2018. On the date of retirement, his capital account shows a credit balance of ₹ 1,50,000. Pass journal entries if:
- The amount due is paid off immediately.
- The amount due is not paid immediately.
- ₹ 1,00,000 is paid and the balance in the future.
Journal Entry
Solution
| Date | Particulars | L.F. | Debit | Credit |
| (a) | Kavin's capital A/c Dr. To Bank A/c [Amount due is paid off immediately] |
1,50,000 | 1,50,000 | |
| (b) | Kavin's capital A/c Dr. To Kavin's loan A/c [Amount due is not paid immediately] |
1,50,000 | 1,50,000 | |
| (c) | Kavin's capital A/c Dr. To Bank A/c To Kavin's loan A/c [₹ 1,00,000 is paid and the balance in future] |
1,50,000 | 1,00,00 50,000 |
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Settlement of the Amount Due to the Retiring Partner
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RELATED QUESTIONS
Manju, Chara’and Lavanya are partners in firm sharing profits and losses in the ratio of 5:3:2. The balance sheet as of 31st March, 2018 was as follows:
| Liabilities | ₹ | ₹ | Assets | ₹ |
| Capital accounts: | 1,30,000 | Buildings | 1,00,000 | |
| Manju | 70,000 | Furniture | 80,000 | |
| Charu | 70,000 | Stock | 60,000 | |
| Lavanya | 70,000 | Debtors | 40,000 | |
| Sundry creditors | 40,000 | Cash in hand | 20,000 | |
| Profit and loss A/c | 50,000 | |||
| 3,00,00 | 3,00,000 |
Manju retired from the partnership firm on 31.03.2018 subject to the following adjustments:
- Stock to be depreciated by ₹ 10,000
- Provision for doubtful debts to be created for ₹ 3,000.
- Buildings to be appreciated by ₹ 28,000
Prepare revaluation account and capital accounts of partners after retirement.
