Pankaj, Naresh and Saurabh are partners sharing profits in the ratio of 3:2:1. Naresh retired from the firm due to his illness-Solution
Q.7. Pankaj, Naresh and Saurabh are partners sharing profits in the ratio of 3:2:1. Naresh retired from the firm due to his illness. On that date the Balance Sheet of the firm was as follows:
Books of Pankaj, Naresh and Saurabh
Balance Sheet as on March 31, 2017
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| General Reserve | 12,000 | Bank | 7,600 |
| Sundry Creditors | 15,000 | Debtors 6,000 | |
| Bills Payable | 12,000 | Less:Provision for Doubtful Debt 400 | 5,600 |
| Outstanding Salary | 2,200 | ||
| Provision for Legal Damages | 6,000 | Stock | 9,000 |
| Capitals: | Furniture | 41,000 | |
| Pankaj 46,000 | Premises | 80,000 | |
| Naresh 30,000 | |||
| Saurabh 20,000 | 96,000 | ||
| 1,43,200 | 1,43,200 |
Additional Information:
(i) Premises have appreciated by 20%, stock depreciated by 10% and provision for doubtful debts was to be made 5% on debtors. Further, provision for legal damages is to be made for Rs 1,200 and furniture to be brought up to Rs 45,000.
(ii) Goodwill of the firm be valued at Rs 42,000.
(iii) Rs 26,000 from Naresh’s Capital account be transferred to his loan account and balance be paid through bank; if required, necessary loan may be obtained from Bank.
(iv) New profit sharing ratio of Pankaj and Saurabh is decided to be 5:1.
Give the necessary ledger accounts and balance sheet of the firm after Naresh’s retirement.
Books of Pankaj, Naresh and Saurabh
Realisation A/c
| Particulars | Amount (Rs.) | Particulars | Amount (Rs.) | |
| To Stock | 900 | By Premises | 16,000 | |
| To Provision for legal damages | 1,200 | By Provision for doubtful debts | 100 | |
| To Profit transfered to partners capital A/c: | By Furniture | 4,000 | ||
| Pankaj | 9,000 | |||
| Naresh | 6,000 | |||
| Saurabh | 3,000 | 18,000 | ||
| 20,100 | 20,100 | |||
Partner’s Capital A/c
| Particulars | Pankaj | Naresh | Saurabh | Particulars | Pankaj | Naresh | Saurabh |
| To Naresh’s Capital A/c | 14,000 | By balance b/d | 46,000 | 30,000 | 20,000 | ||
| To Naresh’s Loan A/c | 26,000 | By general Reserve | 6,000 | 4,000 | 2,000 | ||
| To Bank A/c | 28,000 | By Revaluation A/c | 9,000 | 6,000 | 3,000 | ||
| To balance c/d | 47,000 | 25,000 | By Pankaj’s capital A/c | 14,000 | |||
| 61,000 | 54,000 | 25,000 | 61,000 | 54,000 | 25,000 | ||
Bank A/c
| Particulars | Amount (Rs.) | Particulars | Amount (Rs.) |
| To balance b/d | 7,600 | By Naresh’s Capital A/c | 28,000 |
| To Bank loan (balancing figure) | 20,400 | ||
| 28,000 | 28,000 | ||
Books of Pankaj, Naresh and Saurabh
Balance Sheet as on March 31, 2017
| Liabilities | Amount Rs | Assets | Amount Rs |
| By Sundry Creditors | 15,000 | To Debtors 6,000 | |
| By Bills Payable | 12,000 | Less:Provision for Doubtful Debt 300 | 5,700 |
| By Outstanding Salary | 2,200 | ||
| By Provision for Legal Damages | 7,200 | To Stock | 8,100 |
| By Capitals: | To Furniture | 45,000 | |
| Pankaj 47,000 | To Premises | 96,000 | |
| Saurabh 25,000 | 72,000 | ||
| 1,54,800 | 1,54,800 |
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