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Digvijay, Brijesh and Parakaram were partners in a firm sharing profits in the ratio of 2:2:1-Solution

Q.5. 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.)
Creditors49,000Cash8,000
Reserves18,500Debtors19,000
Digvijay’s Capital82,000Stock42,000
Brijesh’s Capital60,000Buildings207,000
Parakaram’s Capital75,500Patents9,000
 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.

SOLUTION

Revaluation Account

Particulars
Amount 
(Rs.)
Particulars
Amount
(Rs.)
To Bad debts2,000By Loss transferred to partners capital A/c
To Patents9,000  Digvijay4,400
  Parakaram4,400
  Brijesh2,200
11,00011,000

Partners capital A/c

ParticularsDigvijayBrijeshParakaramParticularsDigvijayBrijeshParakaram
To Brijesh’s capital A/c18,667_9,333By balance b/d82,00060,00075,500
To Revaluation A/c (loss)4,4004,4002,200By reserve7,4007,4003,700
To Brijesh’s Capital A/c_91,000_By Digvijay’s capital A/c_18,667_
By balance c/d66,333_67,667By Parakaram’s capital A/c_9,333_
89,40095,40079,20089,40095,40079,200

Balance sheet

as on March 31,2017

Liabilities
Amount
(Rs.)
Assets
Amount
(Rs.)
To Creditors49,000By cash8,000
To Brijesh’s Loan A/c91,000By Debtors19,000
To Digvijay’s Capital A/c66,333Less: Bad debts2,00017,000
To Parakaram’s Capital A/c67,667By Stock42,000
By Buildings2,07,000
2,74,0002,74,000

WN1. 

Calculation for Brijesh’s goodwill distribution 

= Firm’s Goodwill X 2/5

= 70,000 X 2/5

=Rs 28,000

WN2. 

Calculation of Gaing ratio = New ratio – Old ratio

Digvijay =



Parakaram =



Gaing Ratio is 2:4

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