33 :- N, S and G were partners in a firm sharing profits and losses in the ratio 2:3:5. On 31st March, 2016 their balance sheet was under
G retired on the above date and it was agreed that
(a) Debtors of Rs 6,000 will be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts will be maintained.
(b) Patents will be completely written off and stock, machinery and building will be depreciated by 5%.
(c) An unrecorded creditor of Rs 30,000 will be taken into account.
(d) N and S will share the future profits in 2:3 ratio.
(e) Goodwill of the firm on G’s retirement was valued at Rs 90,000.
Pass the necessary journal entries for the above transactions in the books of the firm on G’s retirement.
Solution :-
WORKING NOTES
(a) Calculation of gaining share of partners
New share – old share
N = 2/5 – 2/10 = 2/10
S = 3/5 – 3/10 = 3/10
Gaining ratio of N and S is 2:3
(b) Calculation of share of goodwill of partners
G’s share of goodwill = 90,000 x 5/10 = Rs 45,000
N will brought = 45,000 x 2/5 = Rs 18,000
S will brought = 45,000 x 3/5 = Rs 27,000