Question

Balance Sheet of Sameer, Yasmin and Saloni As on 31.3.2016
Liabilities	Rs	Assets	Rs
Creditors General Reserve Capitals:    Sameer         3,00,000    Yasmin          2,50,000    Saloni           1,50,000	1,10,000 60,000       7,00,000	Cash Debtors                90,000 Less: Provision     10,000 Stock Machinery Building Patents Profit and Loss Account	80,000   80,000 1,00,000 3,00,000 2,00,000 60,000 50,000
	8,70,000		8,70,000

On the above date, Sameer retired and it was agreed that:

1) Debtors of 4,000 will be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts will be maintained

2) An unrecorded creditor of 20,000 will be recorded.

3) Patents will be completely written off and 5% depreciation will be charged on stock, machinery and
building.

4) Yasmin and Saloni will share future profits in the ratio of 3:2

5) Goodwill of the firm on Sameer’s retirement was valued at  Rs 5, 40,000.

Pass necessary journal entries for the above transactions in the books of the firm on Sameer’s retirement

Answer 1

Journal
Sr. No.	Particulars	L.F.	Dr Rs	Cr. Rs
	General A/c    Dr    To Sameer’s Capital A/c    To Yasmin’s Capital A/c    To Saloni’s Capital A/c (Being balance in reserve distributed among all partners in old ratio.)		60,000	24,000 18,000 18,000
	Sameer’s Capital A/c    Dr Yasmin’s Capital A/c    Dr Saloni’s Capital A/c    To Profit & Loss A/c (Being debit balance Profit & Loss A/c written off among all partners in old ratio.)		20,000 15,000 15,000	50,000
	Yasmin’s Capital A/c   Dr Saloni’s Capital A/c    Dr    To Sameer’s Capital A/c (Being goodwill adjusted in gaining ratio.)		64,800 21,600	2,16,000
	Revaluation A/c     To Patent A/c     To Stock A/c     To Machinery A/c     To Building A/c     To Creditors A/c (Being decrease in assets and increase in liabilities debited to Revaluation A/c.)		1,10,000	60,000 5,000 15,000 10,000 20,000
	Provision for Doubtful Debts A/c   Dr     To Revaluation A/c (Being excess Provision written back.)		1,700	1,700
	Sameer’s Capital A/c   Dr. Yasmin’s Capital A/c   Dr. Saloni’s Capital A/c    Dr.     To Revaluation A/c (Being loss on revaluation debited to partners capital account in old ratio.)		43,320 32,490 32,490	1,08,300
	Sameer’s Capital A/c     Dr.    To Sameer’s Loan A/c (Amount due to Sameer’s transferred to his loan A/c)		4,76,680	4,76,680

Working Note:

WN1: Calculation of Sameer's Share of Goodwill

Gaining Ratio = New Ratio — Old Ratio

Yasmin : `3/5 - 3/10 = 3/10`

Saloni: `2/5 - 3/10 = 1/10`

Gaining Ratio Yasmin: Saloni = 3:1

Sameer's Share of Goodwill = Rs  `216000(540000xx4/10)`

Yasmin Share = `216000 xx 3/10 = 64800`

Saloni Share  = `216000 xx 1/10 = 21600`

WN2: Calculation of Excess/Deficit Provision for Doubtful Debts

Required Provision (@5%) = `(90000 - 4000) xx 3/100 = 4300`

Existing Provision (after Writing bad-debts)  = 6,000

Excess Provision (to be written back) =1,700(6,000 -  4,300)

WN3: Calculation of Sameer's Loan Balance

Amount due to Sameer’s = Opening Capital + Credits – Debits

= 3,00,000 + (24,000 + 2,16,0000) – (20,000 – 43,320)

= 3,00,000 + 2,40,000 – 63,320

Amount due to Sameer’s = Rs 476680