Retirement of a Partner (New Profit-Sharing Ratio and Gaining Ratio) 1 2 3. 4 5. 6. Gita, Radha and Garv were partners sharing profits in the ratio of 1/2, 2/5 and 1/10. Find the new ratio of the remaining partners if Garv retires. [Ans.: New Profit-sharing Ratio—5 : 4] X, Y and Z are partners sharing profits in the ratio of 1/2, 3/10, and 1/5. Calculate the gaining ratio of remaining partners when ¥ retires from the firm. (Foreign 2014) [Ans.: Gaining Ratio between X and Z—5:2.] From the following particulars, calculate new profit-sharing ratio of the partners: (a) Shiv, Mohan and Hari were partners in a firm sharing profits in the ratio of 5 : 5: 4. Mohan retired and his share was divided equally between Shiv and Hari (b) P.Qand Rwere partners sharing profits in the ratio of 5 : 4:1. P retires from the firm, [Ans.: New Proft-sharing Ratio—(a) 15: 13;(b)4: 1.1 R, Sand Mare partners sharing profits in the ratio of 2/5, 2/5 and 1/5. M decides to retire from the business and his share is taken by Rand Sin the ratio of 1 :2. Calculate the new profit-sharing ratio. (Delhi 2011 Q [Ans.: New Profit-sharing Ratio—7 : 8.) Sarthak, Vansh and Mansi were partners sharing profits in the ratio of 4 : 3: 2. Sarthak retires. Vansh and Mansi will share future profits in the ratio of 2: 1. Determine the gaining ratio, (Ans.: Gaining Ratio—3 : 1. (2) W.X, Yand Zare partners sharing profits and losses in the ratio of 1/3, 1/6, 1/3 and 1/6 respectively. Y retires and W, X and Z decide to share the profits and losses equally in future. Calculate gaining ratio. ' (b) AB and C are partners sharing profits and losses in the ratio of 4 : 3 : 2. C retires from the business. A takes 4/9 of C’s share and balance is taken by 8. Calculate the new profit-sharing ratio and gaining ratio, Ans.: (a) Gaining Ratio of W, X and Z—0: 1:1. (b) Gaining Ratio of A and 8—4 : 5; New Profit-sharing Ratio—44 : 37, Scanned with CamScanner6.56 Double Entry Book Keeping—CBSE XI 7. Kumar, Lakshya, Manoj and Naresh are partners sharing profits in the ratio of 3:2: 1: 4. Kumar retires and his share is taken by Lakshya and Mano] in the ratio of 3 :2. Calculate new profit-sharing ratio and gaining ratio of the remaining partners. (CERT) {Ans.: New Profit-sharing Ratio—19: 11 : 20; Gaining Ratio of Lakshya and Manoj will be 3:2, Naresh has neither sacrificed nor gained} 3. Bretires and his share is taken up (Ceti 2009) [Ans.: New Profit-sharing Ratio—2: 1,] 8, A,Band C were partners in a firm sharing profits in the ratio of 8 equally by A and C. Find the new profit-sharing ratio. 9. A, Band Care partners sharing profits in the ratio of 5: 3 : 2. Cretires and his share is taken by A. Calculate new profit-sharing ratio of A and B. [Ans.: New Profit-sharing Ratio—7 :3) 10. P, Qand R are partners sharing profits in the ratio of 7: 5: 3. Pretires and it is decided that profit-sharing ratio between Q and R will be same as existing between P and Q. Calculate New profit-sharing ratio and Gaining Ratio. [Ans.: New Profit-sharing Ratio of Qand R—7 : 5; Gaining Ratio—15 : 13.) 11. Murli, Naveen and Omprakash are partners sharing profits in the ratio of 3/8, 1/2 and 1/8. Mutli retires and surrenders 2/3rd of his share in favour of Naveen and remaining share in favour of Omprakash. Calculate new profit-sharing ratio and gaining ratio of the remaining partners. (ncern [Ans.: New Profit-sharing Ratio—3 : 1; Gaining Ratio—2: 1.) 12, Om, Ram and Shanti are partners in a firm sharing profits and losses in the ratio of 4: 3: 2. Ram retires from the firm. Calculate new profit-sharing ratio of Om and Shanti in the following circumstances: (2) If Ram gives his share to Om and Shanti in the original ratio of Om and Shanti. (b) If Ram gives his share to Om and Shanti in equal proportion. (c)_ If Ram gives his share to Om and Shanti in the ratio of 3: 1. (d) If Ram gives his share to Om only. {Ans.: New Profit-sharing Ratio—(a) 2: 1; (b) 11: (9.25:11;()7:2) Treatment of Goodwill 13, Sunil, Shahid and David are partners sharing profits and losses in the ratio of 4 : 3:2. Shahid retires and the goodwill is valued at 872,000. Calculate Shahid's share of goodwill and pass the Journal entry for Goodwill. Sunil and David decided to share future profits and losses in the ratio of 5:3. [Ans.: Shahid’s share of Goodwill = & 72,000 x 3/9 = ® 24,000; Dr. Sunil's Capital A/c by & 13,000 and David's Capital A/c by ® 11,000; Cr. Shahid's Capital A/c by & 24,000 Hint: Sunil gains = 5/8 - 4/9 = 13/72; David gains = 3/8 - 2/9 = 11/72. Hence, Gaining Ratio = 13:11] 14, P,Q, Rand $ were partners in a firm sharing profits in the ratio of 5:3: 1: 1. On 1st January, 2021, $ retired from the firm. On S's retirement, goodwill of the firm was valued at & 4,20,000. New profit-sharing ratio among P, Qand Rwill be 4:3: 3. Showing your working notes clearly, pass necessary Journal entry for the treatment of goodwill in the books of the firm on S's retirement. (Foreign 2017, Modified) lAns.: Dr. R's Capital A/c by ® 84,000; Cr. P's Capital A/c and S's Capital A/c by & 42,000 each] 15. Aparna, Manisha and Sonia are Partners sharing profits in the ratio of 3: 2: 1. Manisha retired and goodwill of the firm is valued at & 1,80,000. Aparna and Sonia decided to share future profits in the ratio of 3 : 2. Pass necessary Journal entries. (CERN [Ans.: Gaining Ratio = 3 : 7; Dr. Aparna's Capital A/c by & 18,000 and Sonia's Capital A/c by & 42,000; Cr. Manisha’s Capital A/c by 60,000.) 16. A,B and C are partners sharing profits in the ratio of 3 : 2: 1. B retired and the new profit-sharing ratio between Aand C was 2: 1. On 6's retirement, the goodwill of the firm was valued at % 90,000. Pass necessary Journal entry for the treatment of goodwill on 8’s retirement. (Ans.: Dr. A’s Capital A/c and C’s Capital A/c by % 15,000 each; r.BS Capital A/c by & 30,000; Gaining Ratio—1: 1) Scanned with CamScannerrr Chapter 6 Retirement of a Partner 6.57 17. Aman, Bimal and Deepak ate partners sharing profits in the ratio of 2: 3: 5. The goodwill of the firm has been valued at 8 37,500, Aman retired, Bimal and Deepak decided to share profits equally in future. Calculate gain/sacrifice of Bimal and Deepak on Aman’s retirement and also pass necessary Journal entry for the treatment of goodwill (CASE 2019) [Ans.: Bimal alone gains, Dr. Bimals Capital A/c and Cr. Aman’s Capital A/c by ® 7,500.) 18, Hanny, Pammy and Sunny are partners sharing profits in the ratio of 3:2: 1. Goodwill is appearing in the books at a value of 60,000. Pammy retires and at the time of Pammy's retirement, goodwill is valued at £34,000, Hanny and Sunny decided to share future profits in the ratio of 2: 1. Record the necessary Journal entries. (CERT) [Ans.: Gaining Ratio = 1: 1;() Dr. Hanny’s Capital A/c by & 30,000, Pammy's Capital A/c by % 20,009 ‘and Sunny's Capital A/c by & 10,000; Cr. Goodwill A/c by & 60,000. (i) Dr. Hanny's Capital A/c and ‘Sunny’s Capital A/c by & 14,000 each; Cr. Pammy’s Capital A/c by & 28,000.) Hidden Goodwill 19, 4 Band Care partners sharing profits in the ratio of 4/9 3/9 : 2/9. B retires and his capital after making adjustments for reserves and gain (profit) on revaluation stands at 1,39,200. A and Cagreed to pay him £150,000 in full settlement of his claim. Record necessary Journal entry for adjustment of goodwill f the new profit-sharing ratio is decided at 5:3. [ans.: Hidden Goodwill (8s Share):® 10,800; Gaining Ratio—13 :11; Dr. As Capital A/c by ® 5,850 and Cs Capital A/c by & 4,950; Cr. B's Capital A/c by ® 10,800.) When One/Some (not all) of the Remaining Partner(s) Gain 20, M,Nand O are partners in a firm sharing profits in the ratio of 3 : 2: 1. Goodwill has been valued 2t £60,000. On N's retirement, M and O agree to share profits equally. Pass the necessary Journal entry for treatment of N's share of goodwill * fans.: Only 0s gaining; Dr. O's Capital A/c and Cr. N's Capital A/c by ® 20,000.) 21. 4.8, Cand Dare partnersina firm sharing profits, inthe ratio of 2: 1:2: 1.On the retirement fC, Goodwill ‘nat valued 180,000. A, B and D decide to share future profits equally. Pass the necessary Journal entry for the treatment of goodwill. [Ans.: Gaining Ratio of A, B and D—0: 1:1. Dr. 8's Capital A/c and ‘Ds Capital A/c by & 30,000 each; Cr. C's Capital A/c by € 60,000.) When One/Some of the Remaining Partner(s) also Sacrifice 22. A, Band C were partners in a firm sharing profits in the ratio of 6 : 5:4. Their capitals were A—T 1,00,000; 8% 80,000 and C—Z 60,000 respectively. On Ist April, 2009, A retired from the firm and the new proft sharing ratio between @ and C was decided as 14. On A's retirement, the goodwil of the firm was valued at &1 80,000, Showing your calculations clearly, pass the necessary Journal entry forthe treatment of goodwill on A's retirement. (Foreign 2010) tans.: Cs Gain—8/15, B' Sactifice—2/15; Dr. Cs Capital A/c by & 96,000; C1. As Capital A/c by & 72,000 and 8's Capital A/c by & 24,000] Revaluation of Assets and Reassessment of Liabilities 23. Sangeeta, aro) and Shant are partners sharing profits and losses in the ratio of 5:3:2, Shanti retired and ‘on the date of her retirement, following adjustments were agres (2) The value of Furiture is to be increased by € 12,000. (b) The value of stock to be decreased by % 10,000. (c) Machinery of the book value ‘of € 50,000 is to be reduced by 10%. Scanned with CamScanner6.58 Double Entry Book Keeping—CBSE XII (d)_A Provision for Doubtful Debts @ 5% is to be created on debtors of book value of & 40,000. (e) Unrecorded investment worth 10,000. (9) An item of & 1,000 included in bills payable is not likely to be claimed, hence, should be written back. Pass necessary Journal entries. [Ans.: (a) Dr. Furniture A/c and Cr. Revaluation A/c by 12,000, (b) Dr. Revaluation A/c and Cr, Stock A/c by € 10,000, (©) Dr, Revaluation A/c and Cr. Machinery A/c by 8 5,000. (d) Dr. Revaluation A/c and Cr. Provision for Doubtful Debts A/c by 8 2,000. (e) Dr. Investment A/c and Cr. Revaluation A/c by & 10,000. (f) Dr. Bills Payable A/c and Cr. Revaluation A/c by & 1,000. (g) Dr. Revaluation A/c by—8 6,000; Cr. Sangeeta's Capital A/c by ® 3,000; Saroj’s Capital A/c by ® 1,800 and Shanti’s Capital A/c by ® 1,200) 24. A Band Cwere partners, sharing profits and losses in the ratio of 2: 2: 1. B retired on 31st March, 2021. On the date of his retirement, some of the assets and liabilities appeared in the books as follows: Creditors % 70,000; Building & 1,00,000; Plant and Machinery % 40,000; Stock of Raw Materials € 20,000; Stock of Finished Goods ® 30,000 and Debtors % 20,000. Following was agreed among the partners on 8's retirement: (a) Building to be appreciated by 20%. (b) Plant and Machinery to be reduced by 10%. (c)_A Provision of 5% on Debtors to be created for Doubtful Debts. (d)_ Stock of Raw Materials to be valued at & 18,000 and Finished Goods at € 35,000. (e)_ An Old Computer previously written off was sold for & 2,000 as scrap. (f)_ Firm had to pay 8 5,000 to an injured employee. Pass necessary Journal entries to record the above adjustments and prepare the Revaluation Account. [Ans.: Gain (Profit) on Revaluation— 15,000.) 25. Punit, Ramit and Akshit were partners sharing profits equally. Akshit retired on Ist April, 2021. Punit and Ramit decided to continue the business and share profits in the ratio of 3 : 2. They also decided to give effect to the change in values of assets and liabilities without changing their book values, The book values and their revised values were as follows: Book Values 2) Revised Values (2) Land 550,000 8,50,000 Building 2,50,000 2,10,000 ‘Computers 1,00,000 70,000 ‘Computer Softwares 5,00,000, 4,00,000 Sundry Creditors 70,000 60,000 Workmen Compensation Claim 5,000 Pass an adjustment entry. (Ans.: Dr. Punit’s Capital A/c by & 36,000 and Ramit’s Capital A/c by 9,000; Cr. Akshit's Capital A/c by % 45,000) Treatment of Reserves and Accumulated Profits/Losses 26. X,Y and Z are partners in a firm sharing profits and losses in the ratio of 3 : 2: 1. Zretired from the firm on Ist April, 2021. On the date of Z's retirement, following balances existed in the books of the firm: General Reserve € 1,80,000 Profit and Loss Account (Dr) % 30,000 Workmen Compensation Reserve % 24,000 which was no more required Employees’ Provident Fund % 20,000. Pass necessary Journal entries for the adjustment of these items on Z’s retirement. {Ans.: (a) Dr. General Reserve A/c by 8 1,80,000 and Workmen Compensation Reserve A/c by & 24,000; Cr. Xs Capital A/c by X 1,02,000, Y's Capital A/c by 8 68,000 and Z's Capital A/c by & 34,000. (6) Dr. Xs Capital A/c by & 15,000, Y's Capital A/c by & 10,000 and Z's Capital A/c by & 5,000; Gr Profit and Loss A/c by & 30,000.) Scanned with CamScannerChapter 6- Retirement of aPartner 6.59 ha, Naveen and Shalini 2 ie ——— pal were Partners in a firm sharing profits in the ratio of 5:3 : 2. Goodwill appeared in of % 80,000 and General Reserve at % 40,000. Naveen decided to from the firm, On the date of his retirement, goodwill of 2 the firm . ratio decided among Asha and Shalini is 2-3, was valued at & 1,20,000. The new profit-sharing Record necessary Journal entries on Naveen retirement. (oeihi 20150 {Ans.: (a) Dr. Asha’s Capital A/c—X 40,000; Naveen’s Capital A/c— 24,000 and Shalini's Capital A/c— 16,000; Cr. Goodwill A/c—8 80,000. (b) Dr. General Reserve A/c—R 40,000; Cr. Asha’s Capital A/c—X 20,000; Naveen's Capital A/c—R 12,000 and Shalini’s Capital A/c— 8,000. (0 For Adjustment of Goodwill Or. Shalin's Capital A/c 48,000; | Cr. Naveen'’s Capital A/c— 36,000 and Asha’s Capital A/c— 12,000.) 28, Ram, Laxman and Bharat are partners sharing profits in the ratio of 3 : 2: 1. Goodwill is appearing in the | books at a value of & 1,80,000. Laxman retires and at the time of his retirement, goodwill is valued at | % 252,000. Ram and Bharat decided to share future profits in the ratio of 2: 1. The Profit for the first year after Laxman’s retirement amount to 1,20,000. Give the necessary Journal entries to record goodwill and to distribute the profit. Show your calculations clearly. (Foreign 2012) [Ans.: To write off Existing Goodwill: Dr. Ram's Capital A/c by € 90,000; Laxman's Capital A/c by % 60,000; and Bharat's Capital A/c by € 30,000; Cr. Goodwill A/c by % 180,000; To Adjust Goodwill: Gaining Ratio—1 : 1; Or. Ram's Capital A/c and Bharat’s Capital A/c by % 42,000 each; Cr. Laxman's Capital A/c by & 84,000. To Distribute Profits: Dr. Profit and Loss Appropriation A/c by 1,20,000; Cr. Ram's Capital A/c by 80,000 and Bharat’s Capital A/c by % 40,000.} Preparation of the Capital Accounts and Balance Sheet 29, Partnership Deed of Cand D, who are equal partners, has a clause that any partner may retie from the firm on the following terms by giving a six-month notice in writing: The retiring partner shall be paid— (a) the amount standing to the credit of his Capital Account and Current Account. (b) his share of profit to the date of retirement, calculated on the basis ofthe average proft ofthe three preceding completed years. (0) half the amount of the goodwill of the firm calculated at 1% times the average profit of the three preceding completed years. C.gave a notice on 31st March, 2020 to retire on 30th September, 2020, when the balance of his Capital Account wes & 6,000 and his Current Account (Dt) € 500. Profits for the three preceding completed years ended 31st March, were: 2018—¥ 2,800; 2019—¥ 2,200 and 2020— 1,600. Determine the amount due to Cas perthe partnership agreement, (Ans. Amount due fo C—¥ 7,700] 30. x ¥ and Z were partners in a firm sharing profits in the ratio of 2: 2: 1 Their Balance Sheet as at 31st March, 2021 was: —- Liabilities ce Ase t Creditor 49,000 | Cash 8,000 Ree 18,500 | Debtors 19,000 . 2000 stock 42,000 pital Aes i e000 Building 207,000 Zz 75,500 Patents 9,000 —T 2,85,000 Scanned with CamScannerro 6.60 Double Entry Book Keeping—CBSE XII Y retired on 1st April, 2021 on the following terms: (a) Goodwill of the firm was valued at & 70,000 and was not to appear in the books. (b) Bad Debts of € 2,000 were to be written off. (©) Patents were considered as valueless, Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of X and Z after Y's retirement. tans 85 on Revaluation—R 1 1,000;%'s Capital Akc—X 66,333; Z's Capital A/c—X 67,667; YsLoan—X 91,000; Balance Sheet Total—R 2,74,000) 31, Kanikka, Disha and Kabir were partners sharing profits in the ratio of 2: 1: 1. On 31st March, 2016, their Balance Sheet was as under: Liabilities z Assets z Trade creditors 53,000] Bank 60,000 Employees’ Provident Fund 47,000 Debtors 60,000 Kanika’s Capital 2,00,000| Stock 100,000, Dishals Capital 100,000 Fixed Assets 240,000 Kabir's Capital 80,000] Profitand Loss A/c 20000 480,000 4,80,000 Kanika retired on 1st April, 2016. For this purpose, the following adjustments were agreed upon: (2) Goodwill of the firm was valued at 2 years’ purchase of average profits of three completed years preceding the date of retirement, The profits for the year: 2013-14 were & 1,00,000 and for 2014-15 were & 1,30,000. (b) Fixed Assets were to be increased to & 3,00,000. (0) Stock was to be valued at 120%. (4) The amount payable to Kanika was transferred to her Loan Account. Prepare Revaluation Account, Capital Accounts of the partners and the Balance Sheet of the reconstituted firm, (ai20170, [Ans.: Gain (Profit) on Revaluation— 80,000; Capital A/cs: Disha— 80,000; Kabir—X 60,000; Kanika’s Loan—z 3,00,000; Balance Sheet Total—R 5,40,000) 32. N, Sand G were partners in a firm sharing profits and losses in the ratio of 2:3: 5. On 31st March, 2016 their Balance Sheet was as under: Liabilities x Assets z Creditors 165,000 | Cash General Reserve 90,000 | Debtors 135,000 | Capitals Less:Provision 15,000 | N 225,000 Stock s 3.75000 Machinery 6 450000 | 10,50,000 | Patents Building Profit and Loss Account 13,05,000 G retired on the above date and it was agreed that: {a) Debtors of € 6,000 will be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts will be maintained. (b) Patents will be completely written off and stock, machinery and ling will be depreciated by 5% SSS —— Scanned with CamScannerr Chapter 6 Retirement of a Partner 6.61 (@) An unrecorded creditor of § 30,000 will be taken into account, (a) Nand Swill share the future profits In 2:3 ratio, (e) Goodwill of the firm on G's retirement was valued at & 90,000. Pass necessary Journal entries for the above transactions in the books of the firm on G's retirement. (Foreign 2017) TAns.: Loss on Revaluation—X 1,62,450; G's Loan—R 4,21,275.) (Hints: 1, For Bad Debts written off: Dr, Bad Debts A/c and Cr. Debtors AVc by & 6,000 2. Or PROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT cr. particulars z Particulars z To Bad Debts Alc F 6000 | By Balance bid 15,000 To Revaluation A/c* (Balancing Figure) 2,550 To Balance c/d [5% of (® 1,35,000 ~% 6,000)] 6,450 15,000 *Excess provision for bad and doubtful debts is credited to‘Revaluation Account'] 33. Ashok, Bhaskarand Chaman are partners in a firm, sharing profits and losses as Ashok 1/3, Bhaskar 1/2,and Chaman 1/6 respectively. The Balance Sheet of the firm as at 31st March, 2021 was: Liabilities z Assets z Cepital Aes: Building 5,00,000 Ashok Plant and Machinery 4,00,000 Bhaskar Furniture 1,00,000 Charman 950,000 } Stock 2,50,000 General Reserve 2,20,000 | Debtors 1,80,000 Sundry Creditors 250,000 | Less:Provision for Doubtful Debts __$,000_| 1,75,000 Loan Payable 150,000 | Cash in Hand 185,000 ‘Advertisement Suspense Account 60,000 15,70,000 Chaman retired on 1st April, 2021 subject to the following adjustments: (2) Goodwill of the frm be valued at & 240,000. Chaman’s share of goodwill be adjusted into the Capital Accounts of Ashok and Bhaskar who will share future profits in the ratio of 3:2. (b) Plant and Machinery to be reduced by 10% and Furniture by 5%. (0) Stock to be increased by 15% and Building by 10%. (@) Provision for Doubtful Debts to be raised to € 20,000. rere esate tek arm ll Seema em Sheet of the firm after Chaman’s retirement. on Revoluation— 27,500; Chaman's Loan— 3,21,250; Partners Capital Accounts [Ans.: Gain (Prof ‘Ashok —X 2,98,500; Bhaskar— 5,17,750; Balance Sheet Total—¥ 15,37,500. Scanned with CamScannery 6.62 Double Entry Book Keeping—CBSE XII 34, Chintan, Ayush and Sudha were partners in a firm sharing profits and losses in the ratio of 5: 3:2. On 31st March, 2019, their Balance Sheet was as follows: BALANCE SHEET OF CHINTAN, AYUSH AND SUDHA as at 31st March, 2019 Liabilities z Assets z Capitals: Plant and Machinery 90,000 Chintan 90,000 Furniture 60000 Ayush 60,000 Stock 30,000 Sudha 40,000 | 1,90,000 } Debtors 60,000 Provident Fund 30,000 | Less: Provision for Doubtful Debts _ 5,000 | $5,000 General Reserve 20,000 | Cashat Bank 15,000 Creditors 10,000 2,50,000, 2,50,000 Chintan retired on the above date and it was agreed that: {a) Debtors of % 5,000 were to be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts was to be created. (b) Goodwill of the firm on Chintan’s retirement was valued at € 1,00,000 and Chintan's share of the same will be adjusted by debiting the Capital Accounts of Ayush and Sudha. (©) Stock was revalued at 7 36,000, (d) Furniture was undervalued by % 9,000. (e) Liability for Workmen's Compensation of % 2,000 was to be created. (A) Chintan was to be paid & 20,000 by cheque and the balance was to be transferred to his loan account. Pass the necessary Journal entries in the books of the firm on Chintan‘s retirement. (case 20200 [Ans.: Gain (Profit) on Revaluation—X 10,250; Chintan’s Loan—R 1,35,125] 35. Pankaj, Naresh and Saurabh are partners sharing profits in the ratio of 3: 2: 1. On 1st April 2021, Naresh retired and on that date, Balance Sheet of the firm was as follows: Liabilities : z Assets z General Reserve 120000 | Bank 7,600 Sundry Creditors 15,000 | Debtors 6,000 Bills Payable 12,000 | Less:Provision for Doubtful Debts __400 5,600 Outstanding Salary 2,200 | Stock 9,000 Provision for Legal Damages 6000 | Furniture 41,000 Capital A/es: Premises 180,000 Pankaj 46000 Naresh 30,000 Saurabh 20000 | 96,000 1,43,200 [143200 pe Additional Information: (a) Premises have appreciated by 20%, stock depreciated by 10% and provision for doubtful debts was to be made 5% on debtors. Further, provision for legal damages is to be made for & 1,200 and furniture to be brought up to % 45,000. (b) Goodwill ofthe firm be valued at & 42,000. (c)_% 26,000 from Naresh’s Capital Account be transferred to his Loan Account and balance be paid through ifrequired, necessary loan may be obtained from bank. Scanned with CamScanner —Chapter 6 - Retirement of a Partner 6.63 (a) New profit-sharing ratio of Pankaj and Saurabh is decided to be 5: 1. Give the necessary Ledger Accounts and Balance Sheet of the firm after Naresh's retirement. (CERT, Modified) (Ans.: Gain (Profit) on Revaluation— 18,000; Balances of Capital Accounts of Pankaj—Z 47,000 and of Saurabh 25,000; Total Amount at credit in Naresh’s Capital—® 54,000 Payment to Naresh— 28,000; Bank Loan—X 20,400; Balance Sheet Total—X 1,54,800] (Hints oe BANK ACCOUNT Se porticlars < | Particulars z Jo Balance 6/4 7,600 | By Naresh Capital A/c 28,000 Jo. BankLoan A/c (Balancing Figure) 20,400 28,000 26/000 et 36. X,Y and Z are partners sharing profits in the ratio of 4 : 3 : 2. Their Balance Sheet as at 31st March, 2021 stood as follows: Liabilities z ‘Assets z Creditors 24,140 | Cash at Bank 3,300 Capital Ales: ‘Sundry Debtors 3,045 x 12,000 Less: Provision for Doubtful Debts _105 2940 y 9,000 Stock 4800 Zz 6000 | 27,000 | Plant and Machinery 5,100 | Land and Building 15,000 YsLoan 20,000 51,140 51,140 Y etired on 1st April, 2021 after giving due notice. Following adjustments in the books of the firm were agreed: (2) Land and Building be appreciated by 10%. (b) Provision for Doubtful Debts is no longer necessary since all the debtors are good. () Stock be appreciated by 20%. (d) Adjustment be made in the accounts to rectify a mistake previously committed whereby ¥ was credited in excess by % 810, while X and Z were debited in excess of € 420 and 390 respectively. (©) Goodwill of the firm be valued at & 5,400 and Y's share of the same be adjusted to the Capital Accounts of X and Z who were going to share future profits in the ratio of 2:1 (f) Itwas decided by X and Z to settle Y's account immediately on his retirement. Prepare:(i) Revaluation Account; (i) Partners Capital Accounts and (ii) Balance Sheet of the firmaafter Y'sretirement. [Ans.: Gain (Profit) on Revaluation—¥ 2,565; Amount paid by ¥ to the firm on his retirement for settlement of his account— 9, 155; Partners’ Capital A/cs: X—X 12,360; 2—X 6,360; Balance Sheet Total—X 42,860; Rectification Entry: Dr. Y's Capital A/c by ® 810; Cr.X's Capital A/c by % 420 and Z's Capital A/c—8 390.) 37. A,B and C are partners sharing profits and losses in the ratio of 4: 3: 3. Their Balance Sheet as at 31st March, 2021 is: abilities z Assets z Creditors 7,000 | Land and Building 36,000 Bil Payable 3,000 | Plant and Machinery 28,000 Reserves 20,000 | Computer Printer 8,000 Capital Ales Stock 20,000 a 32,000 Sundry Debtors 14,000 8 24,000 Less:Provision for Doubtful Debts _ 2,000 c 30000 | 76,000 | Bank pean 1,06,000 7106000 Scanned with CamScanner6.64 Double Entry Book Keeping—CBSE XII (On Ist April, 2021, 8 retired from the firm on the following terms: (a) Goodwill of the firm is to be valued at % 14,000, (b) Stock, Land and Building are to be appreciated by 10%, (©) Plant and Machinery and Computer Printer are to be reduced by 10%. (d) Sundry Debtors are considered to be good. (e) Provision for legal charges to be made at % 2,000. (f) Amount payable to B is to be transferred to his Loan Account. Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of A and C after B's retirement. [Ans.: Gain (Profit) on Revaluation—X 2,000; B's Loan—X 34,800; Partners’ Capital A/cs: A—X 38,400; C—E 24,800; Balance Sheet Total— 1,10,000} 38, Following is the Balance Sheet of X, Y and Zas at 31st March, 2021. They shared profits in the ratio of 3: Liabilities z Assets z Sundry Creditors 2,50,000 | Cash at Bank 50,000 General Reserve 20,000 | Bills Receivable 60,000 Partners'Loan Alcs: Debtors 80,000 x 50,000 Less: Provision for Doubtful Debts 4000 | 76,000 Y 40,000 | 90,000 } Stock 1,24,000 Capital Ales: Fixed Assets 3,00,000 x 1,00,000 Advertisement Suspense A/c 16,000 y 60,000 Profit and Loss A/c 4,000 Zz 50,000 | 2,10,000 6,30,000 630, On 1st April, 2021, Y decided to retire from the firm on the following terms: (a) Stock is agreed to be valued at & 112,000. (b) Provision for Doubtful Debts to be increased to € 6,000, (0) Fixed Assets be appreciated by 10%. (d) Goodwill of the firm, valued at € 80,000 and the amount due to the retiring partners be adjusted in Xs and Zs Capital Accounts. Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet to give effect to the above. [Ans.: Gain (Profit) on Revaluation— 16,000; Y's Loan A/c—X 1,58,500; Partners’ Capital Accounts: XR 1,10,500;2—R 57,000; Balance Sheet Total—X 6,26,000.) 39. X, Yand Zare partners sharing profits and losses in the ratio of 3 : 2: 1. Balance Sheet of the firm as at 31st March, 2021 was as follows: Liabilities z Assets z Creditors 21,000 | Cash at Bank 35750 Workmen Compensation Reserve 12,000 | Debtors 40,000 Investments Fluctuation Reserve 6,000 | Less:Provision for Doubtful Debts 2,000 | 38,000 Capital Ales: Stock 30,000 x 68,000 Investment (Market Value & 17,600) 15,000 Y 32,000 Patents 10,000 Zz 21,000 | 1,21,000 | Machinery 50,000 — Goodwill 6000 ‘Advertisement Expenditure 5,250 160,000 160,000 Zretired on 1st April, 2021 on the following terms: (2) Goodwill of the firm is to be valued at € 34,800. (b) Value of Patents is to be reduced by 20% and that of machinery to 90%, (© Provision for doubtful debts is to be @ 6% on debtors. Scanned with CamScannerChapter 6 - Retirement of a Partner 6.65 (d) Ztook the investment at market value. (e) Liability for Workmen Compensation to the extent of & 750 is to be created. (f) Aliability of 4,000 included in creditors is not to be paid. (g) Amount due to Z to be paid as follows: 5,067 immediately, 50% of the balance within one year and the balance by a draft for 3 Months. Give necessary Journal entries for the treatment of goodwill, prepare Revaluation Account, Capital Accounts and the Balance Sheet of the new firm. [Ans.: Loss on Revaluation— 800; Partners’ Capital Accounts: X—8 67,120; and Y—% 31,413; Z's Loan—Z 2,500; Balance Sheet Total— 1,21,283.] [Hint: Journal Entries for Goodwill: (i) Dr. X's Capital A/c—8 3,000; Y's Capital A/c—% 2,000 and 75 Capital A/c—X 1,000; Cr. Goodwill A/e—¥ 6,000. (ji) Dr. Xs Capital A/c—¥ 3,480 and Y's Capital A/c—X 2,320; Cr. Zs Capital A/c— 5,800.] Scanned with CamScanner