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PRACTICAL PROBLEM

Shedge, Mayekar and Raut were partners sharing profits and losses in the ratio of 4: 3: 3.
Their Balance Sheet on 31st March 2012 was as given below:-

Balance Sheet as on 31st March, 2012
Liabilities
Amount
Rs
Assets
Amount
Rs
Capitals
Furniture
4,200
Shedge
15,000
Stock
13,000
Mayekar
10,000
Debtors
10,000
Raut
10,000
Bill Receivable
18,000
Creditors
8,000
Cash/Bank
2,000
Bank Overdraft
10,000
Profit and Loss A/c (Loss)
5,800
53,000
53,000

Raut retired from the business on above date and it was agreed that the amount due to Raut to be paid immediately by availing overdraft facility

1) His share of goodwill was raised at Rs 3,500

2) Revalue furniture Rs 4,000 and stock Rs 16,000

3) Create R.D.D. at 5% on Debtors.

4) Make provision for outstanding printing bill Rs 6,000. Prepare profit and loss adjustment A/c, Capital A/c and Balance Sheet of continuing partners assuming that goodwill is written off by the continuing partners.

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Solution

Profit and Loss Adjustment Account
Dr.
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Furniture
200
Stock
3,000
Reserve for Doubtful Debts
500
Loss to be transferred to:
Provision for Outstanding Printing Bill
6,000
Shedge’s Capital
1,480
Mayekar’s Capital
1,110
Raut’s Capital
1,110
3,700
6,700
6,700

Partners’ Capital Accounts
Dr.
Cr.
Particulars
Shedge
Mayeker
Raut
Particulars
Shedge
Mayeker
Raut
Profit and Loss Adjustment A/c (Loss)
1,480
1,110
1,110
Balance b/d
15,000
10,000
10,000
Profit and Loss A/c (Loss)
2,320
1,740
1,740
Goodwill
3,500
Goodwill (written off)
2,000
1,500
Bank A/c
10,650
Balance c/d
9,200
5,650
15,000
10,000
13,500
15,000
10,000
13,500

Balance Sheet
as on April 01, 2012 after Raut’s retirement
Liabilities
Amount
Rs
Assets
Amount
Rs
Creditors
8,000
Furniture
4,200
Bank Overdraft
18,650
Less: Depreciation
200
4,000
Capital A/cs:
Stock
16,000
Shedge
9,200
Debtors
10,000
Mayeker
5,650
14,850
Less: Provision for doubtful debts
500
9,500
Provision for Outstanding Printing Bill
6,000
Bills Receivable
18,000
47,500
47,500

Working Notes:



WN1: Distribution of Profit and Loss A/c (Loss)


WN2: Goodwill written off


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