CBSE 2025, Set 3

Question

(b) X, Y and Z were partners sharing profits and losses in the ratio of 5:3:2. Their Balance Sheet on 31st March, 2024 was as follows:
| Liabilities | Amount (₹) | Assets | Amount (₹) | |---|---|---|---| | Capitals: | | Patents | 2,00,000 | | X 6,00,000 | | Furniture | 5,00,000 | | Y 4,00,000 | | Stock | 3,00,000 | | Z 3,00,000 | 13,00,000 | Debtors 2,00,000 | | | General Reserve | 1,20,000 | Less: Prov 20,000 | 1,80,000 | | Bills Payable | 1,00,000 | Cash | 1,40,000 | | Creditors | 80,000 | Profit & Loss A/c | 2,80,000 | | **Total** | **16,00,000** | **Total** | **16,00,000** |

On the above date, Y retired on the following terms:
(i) Goodwill of the firm was valued at ₹ 2,00,000 and the same was adjusted into the capital accounts of X and Z who will share profits in future in the ratio of 3:2.
(ii) Value of stock was to be reduced by ₹ 40,000.
(iii) Patents are found undervalued by 20%.
(iv) Y was paid ₹ 1,00,000 immediately on retirement and the balance was transferred to his loan account carrying interest @ 8% p.a.

Pass necessary journal entries on Y's retirement.

Edvaya · Accepted Answer

The correct answer is Subjective. **Books of X, Y and Z - Journal** | Date | Particulars | L.F. | Dr. Amount (₹) | Cr. Amount (₹) | |---|---|---|---|---| | | Patents A/c ...Dr.     To Revaluation A/c (Patents were found undervalued by 20%. Book value 2,00,000 is 80% of original. True value=2,50,000. Increase=50,000) | | 50,000 | 50,000 | | | Revaluation A/c ...Dr.     To Stock A/c (Value of stock reduced) | | 40,000 | 40,000 | | | Revaluation A/c ...Dr.     To X's Capital A/c     To Y's Capital A/c     To Z's Capital A/c (Profit on revaluation credited to partners in 5:3:2) | | 10,000 | 5,000 3,000 2,000 | | | General Reserve A/c ...Dr.     To X's Capital A/c     To Y's Capital A/c     To Z's Capital A/c (General Reserve credited to partners in 5:3:2) | | 1,20,000 | 60,000 36,000 24,000 | | | X's Capital A/c ...Dr. Y's Capital A/c ...Dr. Z's Capital A/c ...Dr.     To Profit & Loss A/c (Accumulated loss written off in 5:3:2) | | 1,40,000 84,000 56,000 | 2,80,000 | | | X's Capital A/c ...Dr. Z's Capital A/c ...Dr.     To Y's Capital A/c (Y's share of goodwill 2,00,000 × 3/10 = 60,000 adjusted in the gaining ratio 1:2. X=20k, Z=40k) | | 20,000 40,000 | 60,000 | | | Y's Capital A/c ...Dr.     To Cash A/c     To Y's Loan A/c (Y paid 1,00,000, bal 3,15,000 trans to loan A/c. *Cap bal = 4L+3k+36k-84k+60k=4,15,000*) | | 4,15,000 | 1,00,000 3,15,000 |

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Accountancy > Accounting For Partnership Firms > Retirement Of A Partner

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Liabilities	Amount (₹)	Assets	Amount (₹)
Capitals:		Patents	2,00,000
X 6,00,000		Furniture	5,00,000
Y 4,00,000		Stock	3,00,000
Z 3,00,000	13,00,000	Debtors 2,00,000
General Reserve	1,20,000	Less: Prov 20,000	1,80,000
Bills Payable	1,00,000	Cash	1,40,000
Creditors	80,000	Profit & Loss A/c	2,80,000
Total	16,00,000	Total	16,00,000