Question

Naik, Vinay and Vibhuti were partners in a firm sharing profits and losses in the ratio of $4:2:3$. On 31$^{\text{st}}$ March, 2025, Naik retired. General Reserve = ₹ 45,000. Revaluation resulted in a loss of ₹ 18,000. Goodwill of the firm was valued at ₹ 1,80,000 and adjusted without opening goodwill account. Amount payable to Naik was transferred to his loan account. Pass necessary journal entries.

Hint:

Retirement entries order:

• Reserves → old ratio
• Revaluation → old ratio
• Goodwill → gaining ratio
• Final balance → Loan A/c

Answer 1

Old ratio = $4:2:3$ (Naik : Vinay : Vibhuti) Total parts = 9 1. Distribution of General Reserve Reserve = ₹ 45,000 \[ \text{Naik} = 45,000 \times \frac{4}{9} = 20,000 \] \[ \text{Vinay} = 45,000 \times \frac{2}{9} = 10,000 \] \[ \text{Vibhuti} = 45,000 \times \frac{3}{9} = 15,000 \] Entry: \[ \text{General Reserve A/c Dr. 45,000} \] \[ \text{To Naik’s Capital A/c 20,000} \] \[ \text{To Vinay’s Capital A/c 10,000} \] \[ \text{To Vibhuti’s Capital A/c 15,000} \] 2. Revaluation loss Loss = ₹ 18,000 Shared in old ratio. \[ \text{Naik} = 18,000 \times \frac{4}{9} = 8,000 \] \[ \text{Vinay} = 18,000 \times \frac{2}{9} = 4,000 \] \[ \text{Vibhuti} = 18,000 \times \frac{3}{9} = 6,000 \] Entry: \[ \text{Naik’s Capital A/c Dr. 8,000} \] \[ \text{Vinay’s Capital A/c Dr. 4,000} \] \[ \text{Vibhuti’s Capital A/c Dr. 6,000} \] \[ \text{To Revaluation A/c 18,000} \] 3. Goodwill adjustment (without opening goodwill A/c) Total goodwill = ₹ 1,80,000 Naik’s share = $\frac{4}{9}$ \[ 1,80,000 \times \frac{4}{9} = 80,000 \] Gaining partners = Vinay and Vibhuti New ratio (excluding Naik) = $2:3$ So they compensate Naik in ratio $2:3$. Vinay’s share: \[ 80,000 \times \frac{2}{5} = 32,000 \] Vibhuti’s share: \[ 80,000 \times \frac{3}{5} = 48,000 \] Entry: \[ \text{Vinay’s Capital A/c Dr. 32,000} \] \[ \text{Vibhuti’s Capital A/c Dr. 48,000} \] \[ \text{To Naik’s Capital A/c 80,000} \] 4. Transfer of Naik’s balance to Loan A/c Final balance in Naik’s Capital A/c is transferred. Entry: \[ \text{Naik’s Capital A/c Dr. (Balancing figure)} \] \[ \text{To Naik’s Loan A/c} \]