X, Y and Z were partners sharing profits in the proportion of 3:2:1. Y Retiresfrom the business. The Balance sheet of the firm on the date of retirementwas as followsLiabilitiesCreditorsBills PayableGeneral ReserveCapital AccountsXYZAmount (RO)80,000 Cash at Bank40,000 Stock60,000 Debtors LESS Provision160,000 RO 2000120,000 Vehicle80,000540,000AssetsMachineryIt was agreed among the partnersGoodwill of the firm to be valued atProvision for Doubtful debts to be increased byOutstanding expenses to be brought into accountVehicle is to be depreciated byStock is to be depreciated byMachinery is to be appreciated byAmount (RO)20,00060,00080,000100,000280,000540,00096,0004,0007,60017.5%12.5%7.5%Record the necessary Journal Entries and Prepare the necessary accountsand New Balance sheet of X and Z.

When one or more partner decides to retire from the partnership, he will no longer be able to enjoy…

Answered: X, Y and Z were partners sharing…

Business

Accounting

X, Y and Z were partners sharing profits in the proportion of 3:2:1. Y Retires

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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Concept explainers

Partnership Accounting

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.

Partner Admission and Withdrawal

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.

Question

X, Y and Z were partners sharing profits in the proportion of 3:2:1. Y Retires
from the business. The Balance sheet of the firm on the date of retirement
was as follows
Liabilities
Creditors
Bills Payable
General Reserve
Capital Accounts
X
Y
Z
Amount (RO)
80,000 Cash at Bank
40,000 Stock
60,000 Debtors LESS Provision
160,000 RO 2000
120,000 Vehicle
80,000
540,000
Assets
Machinery
It was agreed among the partners
Goodwill of the firm to be valued at
Provision for Doubtful debts to be increased by
Outstanding expenses to be brought into account
Vehicle is to be depreciated by
Stock is to be depreciated by
Machinery is to be appreciated by
Amount (RO)
20,000
60,000
80,000
100,000
280,000
540,000
96,000
4,000
7,600
17.5%
12.5%
7.5%
Record the necessary Journal Entries and Prepare the necessary accounts
and New Balance sheet of X and Z.

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