N, G and G were partners in a firm sharing profits and losses in the ratio of 2 : 3 : 5. On 31st March, 2016 their Balance Sheet was as under:
| Liabilities | ₹ | Assets | ₹ | |
| Creditors General Reserve Capitals: N S G |
1,65,000 90,000 2,25,000 3,75,000 4,50,000 |
Cash Debtors Less: Provision Stock Machinery Patents Building Profit & Loss Account |
1,35,000 15,000 |
1,20,0001,20,000 1,50,000 4,50,000 90,000 3,00,000 75,000 |
| 13,05,000 | 13,05,000 |
G retired on the above date and it was agreed that:
(a) Debtors of ₹ 6,000 will be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts will be maintained.
(b) Patents will be completely written off and stock, machinery and building will be depreciated by 5%.
(c) An unrecorded creditor of ₹ 30,000 will be taken into account.
(d) N and S will share the future profits in 2 : 3 ratio.
(e) Goodwill of the firm on G’s retirement was valued at ₹ 90,000.
Pass necessary Journal entries for the above transactions in the books of the firm on G’s retirement.
[Ans.: Loss on Revaluation – ₹ 1,62,450; G’s Loan – ₹ 4,21,275.]
Solution:-
