Retiring Partner's Capital Adjustments for Goodwill and Revaluation

Steps:

• Identify adjustments: Goodwill valued at $5000 credited to partners' capitals in profit-sharing ratio; not retained, so temporary entry.
• For retiring partner Q: Goodwill share credited to Q's capital account to compensate for loss of future profits.
• Revalue net assets: $5000 increase credited to all partners' capitals, including Q's, in profit-sharing ratio.
• Not retained: Both adjustments increase Q's capital via credits before settlement; no debits to Q's account for these.

Why B is correct:

• Both goodwill and revaluation profits are credited to Q's capital per partnership accounting rules (IAS 28 or standard texts), raising the balance payable on retirement.

Why the others are wrong:

• A: Implies revaluation debited to Q, but revaluation profit is credited, not debited.
• C: Implies goodwill debited to Q, but goodwill is credited to recognize retiring partner's share.
• D: Both debited to Q, but neither adjustment reduces Q's capital; both increase it.

Final answer: B