Chintan, Ayush and Sudha were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. On 31st March, 2019, their Balance Sheet was as follows:

Balance Sheet of Chintan, Ayush and Sudha as at 31st March, 2019

Liabilities Amount ₹ Assets Amount ₹
Capitals : Plant and Machinery 90,000
Chintan 90,000 Furniture 60,000
Ayush 60,000 Stock 30,000
Sudha 40,000 1,90,000 Debtors 60,000
Provident Fund 30,000 Less: Provision for
doubtful debts 5,000
General Reserve 20,000 Cash at Bank 15,000
Creditors 10,000
2,50,000 2,50,000

Chintan retired on the above date and it was agreed that:

(i) Debtors of 5,000 were to be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts was to be created.

(ii) Goodwill of the firm on Chintan’s retirement was valued at 1,00,000 and Chintan’s share of the same will be adjusted by debiting the Capital Accounts of Ayush and Sudha.

(iii) Stock was revalued at 36,000.

(iv) Furniture was undervalued by 9,000.

(v) Liability for workmen’s compensation of 2,000 was to be created.

(vi) Chintan was to be paid 20,000 by cheque and the balance was to be transferred to his loan account.

Pass the necessary journal entries in the books of the firm on Chintan’s retirement. 

Marks-8, CBSE:2019-20/Compartment/Q-22*


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