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 |
55,000 |
| 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*