DateParticularsL.F.Dr.(Rs)Cr. (Rs)2011April 1Reserve Fund A/cDr.6,000 To A's Capital A/c3,000 To B's Capital A/c1,800 To C's Capital A/c1,200(The transfer of reserve fund to partner's capital accountsin their old profit sharing ratio) –––––––––––––––––––––––––––––––––––––––––––––––––Workmen's Compensation Reserve A/cDr.2,000 To A's Capital A/c1,000 To B's Capital A/c600 To C's Capital A/c400(The transfer of Workmen's Compensation Reserve toPartner's Capital A/cs in their old profit sharing ratio)–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Revaluation A/cDr.6,400 To Provision for Doubtful Debts A/c400 To Patents A/c4,000 To Sundry Creditors A/c2,000(Decrease in the value of assets and increase inCreditors) ––––––––––––––––––––––––––––––––––––––––––––Stock A/cDr.4,000Building A/cDr.12,000 To Revaluation A/c16,000(Increase in the value of Assets)––––––––––––––––––––––––––––––––––Revaluation A/cDr.9,600 To A's Capital A/c4,800 To B's Capital A/c2,880 To C's Capital A/c1,920(Profit on revaluation transferred to partner's Capital A/c)––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––A's Capital A/cDr.3,000B's Capital A/cDr.1,800C's Capital A/cDr.1,200 To Goodwill A/c6,000(Goodwill appearing in the books written off on C's retirement)––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––A's Capital A/cDr.2,500B's Capital A/cDr.1,500 To C's Capital A/c4,000(C's share of Goodwill adjusted to the accounts ofcontinuing partners in their gaining ratio 5 : 3)––––––––––––––––––––––––––––––––––––––––––––––––––C's Capital A/cDr.31,320 To C's Loan A/c31,320(The Balance of C's Capital A/c transferred to C's loanA/c)
Dr REVALUATION ACCOUNT Cr
ParticularsRsParticularsRsProvision for Doubtful DebtsStock A/c4,000A/c400Buildings A/c12,000Patents A/c4,000Sundry Creditors A/c2,000Profit transferred toA4,800B2,880C1,920––––––9,600¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯16,000––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯16,000––––––––
Dr CAPITAL ACCOUNTS Cr
ParticularsABCParticularsABCGoodwill A/c3,0001,8001,200Balance b/d50,00035,00025,000C's Capital A/c2,5001,500Reserve Fund A/c3,0001,8001,200C's Loan A/c31,320Workmen'sBalance c/d53,30036,980Compensation Reserve A/c1,000600400Revaluation A/c4,8002,8801,920A's Capital A/c2,500B's Capital A/c1,500¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯58,800––––––––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯40,280––––––––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯32,520––––––––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯58,800––––––––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯40,280––––––––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯32,520––––––––––––––––
BALANCE SHEET OF NEW FIRM (of A and B)
as at 1st April. 2011
LiabilitiesRsAssetsRsSundry Creditors12,000Cash2,000C's Loan31,320Sundry Debtors8,000Employee's Provident Fund5,000Less : Provision forCapitals :Doubtful debts(400)––––––7,600A53,300Stock44,000B36,980––––––––90,280Furnitre13,000Buildings72,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,38,600––––––––––––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,38,600––––––––––––––––––––
Working Notes : 1. Calculation of Goodwill : Total profits of the last four years
= Rs 14,400 + Rs 20,000 - Rs 10,000 + Rs 15,600 = Rs 40,000
Average Profit =Rs40,0004=Rs 10,000
Goodwill =10,000×2=Rs 20,000
2. In the absence of any information, the retiring partner's balance of Capital Account is transferred to his Loan Account.
3. Amount of Employee's Provident Fund belongs to the employees of the Firm. It will be paid to them on their retirement, hence it cannot be transferred to the Capital Accounts of partners.