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12th | Retirement of a Partner | Question No.  16 To 20 | Ts Grewal Solution 2022-2023

Question 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 A and C was 2 : 1. On B's retirement, the goodwill of the firm was valued at  ` 90,000. Pass necessary Journal entry for the treatment of goodwill on B's retirement.

 

Answer:


Journal

Particulars

L.F.

Debit

`

Credit

`

A’s Capital A/c

Dr.

 

15,000

 

C’s Capital A/c

Dr.

 

15,000

 

To B’s Capital A/s

 

 

30,000

(Being Adjustment B’s share of goodwill made)

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (A, B and C) = 3 : 2 : 1

B retires from the firm.

New Ratio (A and C) = 2 : 1

Gaining Ratio=New Ratio − Old Ratio

A‘s share=2/3 -3/6 =4-3/6=1/6

B‘s share= 1/3 -1/6 =2-1/6=1/6

Gaining Ratio = 1 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = ` 90,000

B’s share of goodwill =90,000×2/3=30,000

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 1 : 1).

A’s and C’s capital will be debited =30,000×1/2=15000

 

Question 17: Aman, Bimal and Deepak are partners sharing profits in the ratio of 2: 3: 5. The goodwill of the firm has been valued at `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. (CBSE 2019)

 

 

 

Answer:


Journal

Date

Particulars

L.F.

Debit

 ( `)

Credit

 ( `)

Bimal’s capital a/c

Dr.

7,500

 

   To Amal’s capital a/c

7,500

 

(Being Goodwill adjusted)

 

 

 

 

 

 

 

Working notes;

WN1-

Calculation of gaining and sacrificing ratio

 

Amal

Bimal

Deepak

Old ratio

2                   :

3                :

5

New ratio

Retires

1                :

1

Bimal = 3/10-1/2=3-5/10= -2/10

Deepak =5/10-1/2=5-5/10= 0/10

Gaining ratio of Sunil and David=13:11

 

WN2-

Firms goodwill =37,500

Share of retiring partner Amal is 2/10

Share of Amal share =37,500×2/10=7,500

Bimal will compensate 7,500

 

Question 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  ` 84,000. Hanny and Sunny decided to share future profits in the ratio of 2 : 1. Record the necessary Journal entries. 

Answer:


Journal

Date

Particulars

L.F.

Debit

 ( `)

Credit

 ( `)

 

Hanny’s Capital A/c

Dr.

 

30,000

 

 

Pammy’s Capital A/c

Dr.

 

20,000

 

 

Sunny’s Capital A/c

 

 

10,000

 

 

To Goodwill A/c

 

 

 

60,000

 

(Being Old goodwill written-off in old ratio)

 

 

 

 

 

 

 

 

 

 

 

Hanny’s Capital A/c

Dr.

 

14,000

 

 

Sunny’s Capital A/c

Dr.

 

14,000

 

 

To Pammy’s Capital A/c

 

 

 

28,000

 

(Being Adjustment for goodwill in gaining ratio)

 

 

 

 


Working Notes:

WN1: Calculation of Pammy’s Share in Goodwill

Pammy's share=Firm's Goodwill×Pammy's Profit SharePammy's share =84,000×26=28,000 to be borne by gaining partners in gaining ratio

WN2: Calculation of Gaining Ratio

Gaining Ratio = New Ratio − Old Ratio

Hanny's gain=2/3−3/6=1/6

Sunny's gain=1/3−1/6=1/6

Gaining Ratio=1:1

 

Question 19:


A, B and C are 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 C agreed to pay him  ` 1,50,000 in full settlement of his claim. Record necessary Journal entry for adjustment of goodwill if the new profit-sharing ratio is decided at 5 : 3.

 

Answer:


Journal

 

Date

Particulars

L.F.

Debit

`

Credit

`

 

A’s Capital A/c

Dr.

 

5,850

 

 

C’s Capital A/c

Dr.

 

4,950

 

 

    To B’s Capital A/c

 

 

 

10,800

 

(Being Adjustment of B’s share of goodwill)

 

 

 

 


Working Notes
i. Calculation of B’s share of goodwill
A, B and C are sharing profits in ratio 4/9 : 3/9 : 2/9
B retires from the firm. Remaining partners agreed to pay him
` 1,50,000
B’s capital after making necessary adjustments
` 1,39,200
Therefore, Hidden Goodwill is
` (1,50,000 – 1,39,200) i.e. ` 10,800

ii Gaining Ratio
New profit sharing ratio between A and B is 5:3
A's Gain=5/8-5/9=13/72

C's Gain=3/8-2/9=11/72
Gaining ratio 13:11

Thus, B’s share of goodwill will be brought in by A and C in the gaining ratio 13:11 i.e.

A’s capital will be debited =10,800×13/24=5850

C’s capital will be debited =10,800×11/24=4950

 

Question 20: Shivam, Kapil and Deepak are partners sharing profits in the ratio of 3:1:2. On 31st March, 2022, Kapil retired and his capital account after adjustments of reserve and profit on revaluation was ` 3,50,000. Shivam and Deepak paid him  ` 4,20,000 in settlement of his claim. To settle his account, a computer of ` 4,20,000 was given to Kapil. Pass the necessary Journal entries in the books of the firm.


Answer:


Date

Particulars

 

`

`

1.

Shivam’s Capital A/c

Dr.

42,000

 

 

Deepak’s Capital A/c

Dr.

28,000

 

 

 To Kapil’s Capital A/c

 

 

70,000

 

(Kapil was compensated for his share of goodwill )

 

 

 

2.

Kapil’s Capital A/c

Dr.

4,20,000

 

 

 To Computer A/c

 

 

4,20,000

 

(Computer was paid in consideration of Capital)

 

 

 

Working notes:

Kapil’s capital

(after adjustments of reserve and profit on revaluation) 

=

` 3,50,000

Less: Shivam and Deepak paid him capital in settlement of his claim

=

` 4,20,000

Hidden Goodwill (Share of Kapil in Goodwill)

=

` 70,000

Ts Grewal Solution 2022-2023

Click below for more Questions

Class 12 / Volume – I

Chapter 1 – Retirement of a Parnter

 

Question No. 1 To 5
Question No. 6 To 10
Question No. 11 To 15
Question No. 16 To 20
Question No. 21 To 25
Question No. 26 To 30
Question No. 31 To 35
Question No. 36 To 40
Question No. 41 To 45
Question No. 46 To 50
Question No. 51 To 55

Question No. 56 To 59

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12th TS Grewal’s Accountancy Solutions

Ts Grewal Solution 2022-2023

Ts Grewal Solution 2021-2022

Ts Grewal Solution 2020-2021