25 : Aman, Barman and Raman were partners sharing Profits & Losses in the ratio 5:3:2. Their Balance Sheet on March 31, 2025 was as follows
On the above date Barman retired and his share was acquired by Aman and Raman equally. Following agreements were agreed upon:-
a) Create Provision for doubtful debts @ 10%.
b) Market value of Building is Rs 1,00,000 and Furniture was overvalued by 20%.
c) Stock was valued at Rs 55,000. Creditors of Rs 15,000 took over stock of Rs 10,000 in settlement of their claims.
d) Goodwill of the firm was valued at Rs 80,000.
e) Prepaid Expenses are worthless and Outstanding Expenses are now Rs 20,000.
f) Rs 20,000 was immediately paid to Barman on retirement brought in Aman and Raman in ratio 3:2.
Prepare Revaluation Account and Partner’s Capital Account at the time of retirement of partner.
Solution :-
WORKING NOTES :
Barman’s share = 3/10
He retires
Aman and Raman gain in 1:1
Calculation of New ratio of Aman and Raman
Aman = 5/10 + 3/20 = 13/20
Raman = 2/10 + 3/20 = 7/20
New ratio of Aman and Raman is 13 : 7
Calculation of Share of Goodwill
Barman will get = 80,000 x 3/10 = Rs 24,000
Aman will give = 24,000 x 1/2 = Rs 12,000
Raman will give = 24,000 x 1/2 = Rs 12,000