Shailja, Sonam and Arpita are the partners sharing profit and loss in the ratio of 2/5, 5/10 and 1/10. Balance sheet of the firm on 31.3.2025 was as under:
Balance Sheet
| Liabilities | Amt.(₹) | Assets | Amt.(₹) |
|---|---|---|---|
| Creditors | 90,000 | Goodwill | 30,000 |
| General reserve | 70,000 | Building | 2,82,000 |
| Capital Accounts: Shailja 2,00,000; Sonam 1,00,000; Arpita 90,000 | 3,90,000 | Machinery | 1,45,000 |
| Current Accounts: Shailja 26,000; Sonam 14,000 | 40,000 | Investments | 33,000 |
| Bad debt reserve | 10,000 | Stock | 20,000 |
| Debtors | 50,000 | ||
| Loan to Arpita | 30,000 | ||
| Current Account: Arpita | 10,000 | ||
| 6,00,000 | 6,00,000 |
Arpita retired on 1.4.2025 as a partner. At the time of her retirement, partners decided that:
(1) ₹ 4,000 is outstanding for rent payable.
(2) Interest on investment is receivable ₹ 2,500.
(3) Investments to be sold for ₹ 35,000.
(4) Goodwill of the firm is valued at ₹ 2,00,000.
(5) Shailja and Sonam will share future profit in the ratio of 1:1.
Prepare necessary accounts and balance sheet after retirement.
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Start your 14-day free trial to unlock the full solution →Arpita is paid off through a loan of 74,050; Shailja alone compensates her goodwill of 20,000; balance sheet totals 5,24,500.
Old ratio Shailja : Sonam : Arpita = 2/5 : 5/10 : 1/10 = 4 : 5 : 1. New ratio Shailja : Sonam = 1 : 1.
Gaining ratio = New - Old: Shailja 5/10 - 4/10 = 1/10 (gain); Sonam 5/10 - 5/10 = 0. So Shailja alone gains Arpita's 1/10 share.
Existing goodwill 30,000 written off in old ratio: Shailja 12,000, Sonam 15,000, Arpita 3,000.
Arpita's share of firm's goodwill = 2,00,000 x 1/10 = 20,000, borne by Shailja (the only gainer).
Revaluation Account:
| Particulars (Dr) | Amount | Particulars (Cr) | Amount |
|---|---|---|---|
| To Outstanding rent | 4,000 | By Interest on investment receivable | 2,500 |
| To Profit t/f: Shailja 200; Sonam 250; Arpita 50 | 500 | By Profit on sale of investment (35,000 - 33,000) | 2,000 |
| Total | 4,500 | Total | 4,500 |
Partners' Current Accounts (reserves, revaluation, goodwill routed here):
| Particulars | Shailja | Sonam | Arpita | Particulars | Shailja | Sonam | Arpita |
|---|---|---|---|---|---|---|---|
| To Balance b/d | - | - | 10,000 | By Balance b/d | 26,000 | 14,000 | - |
| To Goodwill written off | 12,000 | 15,000 | 3,000 | By General reserve | 28,000 | 35,000 | 7,000 |
| To Arpita (goodwill) | 20,000 | - | - | By Revaluation profit | 200 | 250 | 50 |
| To Balance c/d | 22,200 | 34,250 | - | By Shailja (goodwill) | - | - | 20,000 |
| To Arpita's capital (transfer) | - | - | 14,050 | ||||
| Total | 54,250 | 49,250 | 27,050 | Total | 54,250 | 49,250 | 27,050 |
Arpita's Capital Account:
| Particulars (Dr) | Amount | Particulars (Cr) | Amount |
|---|---|---|---|
| To Loan to Arpita (set off) | 30,000 | By Balance b/d | 90,000 |
| To Arpita's Loan A/c (amount due) | 74,050 | By Current A/c (transfer) | 14,050 |
| Total | 1,04,050 | Total | 1,04,050 |
| … |
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