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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Dear Student
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


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