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X, Y and Z are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Z retires from the firm on 31st March, 2018. On the date of Z’s retirement, the following balances appeared in the books of the firm: General Reserve – ₹ 1,80,000 Profit and Loss Account (Dr.) – ₹ 30,000 Workmen Compensation Reserve – ₹ 24,000, which was no more required Employees Provident Fund – ₹ 20,000. Pass necessary journal entries for the adjustment of these items on Z’s retirement. |
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Answer» eneral Reserve A/c Dr.1,80,000Workmen COMPENSATION Reserve A/c Dr.24,000To X’s Capital A/c1,02,000To Y’s Capital A/c68,000To Z’s Capital A/c34,000(Being accumulated profit distributed AMONG partners in old RATIO)X’s Capital A/c Dr.15,000Y’s Capital A/c Dr.10,000Z’s Capital A/c Dr.5,000To Profit and Loss A/c30,000(Being debit balance in profit and loss A/c distributed among partners in old ratio)Working note:1. Calculation of share in credit balance of ReserveTotal credit balance of Reserves = General Reserve + WCF= 1,80,000 + 24,000= 2,04,000X’s share = 2,04,000 X 3/6 = Rs. 1,02,000Y’s share = 2,04,000 X 2/6 = Rs. 68,000Z’s share = 2,04,000 X 1/6 = Rs. 34,0002. Calculation of share in debit balance of Profit and Loss A/cX’s share = 30,00 X 3/6 = Rs. 15,000Y’s share = 30,000 X 2/6 = Rs. 10,000Z’s share = 30,000 X 1/6 = Rs. 5,000Note: Employer PROVIDENT FUND will not be distributed as it is a liability and not accumulated profit. |
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