geeta, sita and sarita are partners in a firm sharing profits and losses in the ratio 5:3:2. sita decided to retire on 1 April,2016. geeta and sarita decided to share profits and losses equally in future. the capitals of geeta and sarita after all adjustments with respect of revaluation, goodwill and reserve etc showed a balance of RS.1,00,000 and RS. 60,000 respectively. cash payable to sita of RS. 1,50,000 was to be contributed by geeta and sarita in a such a way that their capitals would be proportion to their PSR. pass the journal entries in the books of the firm to record the transactions. show the working clearly.
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| Journal in the books | ||||
| Date | Particulars | Debit | Credit | |
| Cash A/c | Dr. | 1,50,000 | ||
| To Geeta's Capital A/c | 55,000 | |||
| To Sarita's Capital A/c | 95,000 | |||
| (Being Cash brought in by both the pratners to pay Sita and to make their capital in proportion to PSR) | ||||
| Sita's Capital A/c | Dr. | 150,000 | ||
| To Cash A/c | 150,000 | |||
| (Being Sita paid on retirement) | ||||
| Adjustment Of Capital | ||
| Total Capital of new Firm = Capital of Geeta + Capital of Sarita + Amt to be paid to Sita | 1,00,000 + 60,000 + 1,50,000 | 310,000 |
| Geeta's share of Capital | 3,10,000 x 1/2 | 155,000 |
| Existing Capital of Geeta after all adjustments | 100,000 | |
| Amt brought in by Geeta | 1,55,000 - 1,00,000 | 55,000 |
| Sarita's share of Capital | 3,10,000 x 1/2 | 155,000 |
| Existing Capital of Sarita after all adjustments | 60,000 | |
| Amt brought in by Sarita | 1,55,000 - 60,000 | 95,000 |
Regards