Solution of Q 43 Retirement of Partner TS Grewal 2023-24 [CBSE]

Harish, Paresh and Mahesh were three partners sharing profits and losses in the ratio of 5 : 4 : 1.

Paresh retired on 31st March, 2022. His capital as on 1st April, 2021, was ₹ 80,000. During the year 2021–22, he withdrew ₹ 5,000. He was to be charged interest of ₹ 100 on drawings.

The Partnership Deed provides that on the retirement of a partner, he will be entitled to:

1. (i) His share of capital.
2. (ii) Interest on capital @ 10% per annum.
3. (iii) His share of profit in the year of retirement.
4. (iv) His share of goodwill of the firm.
5. (v) His share in the profit/loss on revaluation of assets and liabilities.

Additional Information:

1. (a) Paresh’s share in the profit of the firm for the year 2021–22 was ₹ 20,000.
2. (b) Goodwill of the firm was valued at ₹ 24,000.
3. (c) The firm incurred loss of ₹ 12,000 on the revaluation of assets and liabilities.
4. (d) Paresh was to be paid ₹ 7,700 in cash and the balance was to be transferred to his Loan Account bearing interest @ 6% per annum. Loan was to be repaid in two equal annual instalments, the first instalment to be paid on 31st March, 2023.

You are required to prepare:

1. (i) Paresh’s Capital Account.
2. (ii) Paresh’s Loan Account till it is finally closed.