The following is the balance sheet of P, Q and R who were sharing profits and losses in the proportion of 4:3:2 as on 31st March 2009 Liabilities RO Assets RO Capitals P Q R P’s Loan Provision for taxation Accounts Payables 80,000 45,000 35,000 7,000 3,000 56,000 226,000 Premises Fixtures and fittings Joint life policy Stock Accounts receivables Cash 85,000 20,000 10,000 68,000 40,000 3,000 226,000 Q decides to retire from the business due to her marriage. It is agreed that Commission accrued but not received RO 6,000 be brought into accounts Provision for taxation need not be maintained as there is no liability attached to it The surrender value of the joint life policy is RO 8,000 Premises is appreciated by RO 12,000 Fixtures and fitting and stock to be depreciated by 10% Goodwill of the entire firm be fixed at RO 21,600 and Q’s share if it be adjusted through the capital accounts of P and R That Q should be given RO 15,600 immediately and the balance be transferred to his Loan account Give ledger accounts and the statement of financial position after the retirement of Q

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following is the balance sheet of P, Q and R who were sharing profits and losses in the proportion of 4:3:2 as on 31^st March 2009

Liabilities

Assets

Capitals

P’s Loan

Provision for taxation

Accounts Payables

80,000

45,000

35,000

7,000

3,000

56,000

226,000

Premises

Fixtures and fittings

Joint life policy

Stock

Accounts receivables

Cash

85,000

20,000

10,000

68,000

40,000

3,000

226,000

Q decides to retire from the business due to her marriage. It is agreed that

Commission accrued but not received RO 6,000 be brought into accounts
Provision for taxation need not be maintained as there is no liability attached to it
The surrender value of the joint life policy is RO 8,000
Premises is appreciated by RO 12,000
Fixtures and fitting and stock to be depreciated by 10%
Goodwill of the entire firm be fixed at RO 21,600 and Q’s share if it be adjusted through the capital accounts of P and R
That Q should be given RO 15,600 immediately and the balance be transferred to his Loan account

Give ledger accounts and the statement of financial position after the retirement of Q

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