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Question
The Balance sheet of samarth traders is as follows. The partners share profits and losses as 5 : 2 : 3,
Balance sheet as on 31st March, 2016
| Liabilities | Amt(Rs) | Assets | Amt(Rs) | |
| Capital A/cs | Plant and machinery | 16,000 | ||
| Prakash | 18,000 | Building | 20,000 | |
| Dinakar | 16,000 | Stock | 10,200 | |
| Rajan | 8,800 | Debtors | 8,400 | |
| Creditors | 10,600 | Less: R.D.D | 400 | 8,000 |
| General reserve | 7,000 | Cash in hand | 6,200 | |
| 60,400 | 60,400 |
Dinankar retired from the business on 1st April, 2016 on the following terms:
(1) The assets are revalued as under:
(a) Stock at Rs 14000
(b) Building is appreciated by 10%
(c) Reserve for doubtful debts is to be increased upto Rs 500.
(d) Plant and machinery is to be depreciated by 10%
(2) The goodwill of the retiring partner is valued at Rs 40,000 and the remaining partners decided that goodwill be written back in their new profit sharing ratio which will be 5 : 3.
(3) Dinankar is to be paid Rs 2220 in cash on his retirement and the balance is to be transferred to his loan account.
Prepare :
(1) Profit and loss Adjustment account
(2) Capital Account of partners
(3) Balance sheet of new firm
Solution
In the books of Samarth Traders
Profit and Loss Adjustment Account.
Dr. Cr.
| Particulars | ₹ | Particulars | ₹ | |
| To R.D.D A/c | By stock A/c | 3800 | ||
| New | 500 | 100 | By Building A/c | 2000 |
| Less : Old | 400 | |||
| To plant & machinery A/c | 1600 | |||
| To Partner's capital A/c's | ||||
| Prakash | 2050 | 4100 | ||
| Dinakar | 820 | |||
| Rajan | 1230 | |||
| 5800 | 5800 | |||
Partner’s Capital A/c
| Particulars | Prakash | Dinakar | Rajan | Particulars | Prakash | Dinakar | Rajan |
| To Goodwill A/c | 2500 | 1500 | By Balance b/d | 18000 | 16000 | 8800 | |
| To Cash A/c | 2220 | By General Res. | 3500 | 1400 | 2100 | ||
| To Dinakar’s Loan A/c | 20000 | By Goodwill A/c | 4000 | ||||
| To Balance c/d | 21050 | 10630 | By Profit and Loss Adjustment A/c | 2050 | 820 | 1230 | |
| 23550 | 22220 | 12130 | 23550 | 22220 | 12130 |
Cash / Bank Account
| Particulars | ₹ | Particulars | ₹ |
| To balance b/d | 6200 | By Dinakar's Capital A/c | 2220 |
| By Balance c/d | 3980 | ||
| 6200 | 6200 |
Goodwill A/c
| Particulars | ₹ | Particulars | ₹ |
| To Dinakar Capital A/c | 40000 | By Prakash Capital A/c | 25000 |
| By Rajan Capital A/c | 15000 | ||
| 40000 | 40000 |
New Balance Sheet as on 31st March , 2016
| Particulars | ₹ | Particulars | ₹ | ||
| Partner’s Capital | Building | 20000 | 22000 | ||
| Prakash | 21050 | 31680 | Add: Appreciation | 2000 | |
| Rajan | 10630 | Plant & Machinery | 16000 | 14400 | |
| Dinkar’s Loan A/c | 20000 | Less: Depreciation | 1600 | ||
| Creditors | 10600 | Stock | 10200 | 14000 | |
| Add: Appreciation | 3800 | ||||
| Debtors | 8400 | 7900 | |||
| Less: R.D.D. | 500 | ||||
| Cash | 3980 | ||||
| 62280 | 62280 | ||||
APPEARS IN
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