Question 21:
M,
N and O are partners in a firm sharing profits in
the ratio of 3 : 2 : 1. Goodwill has been valued
at ` 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.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit (`) |
Credit (`) |
|
|
|
|
|
|
|
|
O’s Capital A/c |
Dr. |
|
20,000 |
|
|
To N’s Capital A/c |
|
|
|
20,000 |
|
(Being Adjustment of N’s share of goodwill) |
|
|
|
|
|
|
|
|
|
Working Notes:
WN1:Calculation of
Gaining Ratio
M :N :O=3:2:1(Old ratio)
M :O =1:1(New ratio)
Gaining Ratio = New Ratio - Old Ratio
M's Gain =1/2−3/6=3−3/6=0
O's Gain=1/2−1/6=3−1/6=2/6
WN2: Calculation of Retiring Partner’s Share of Goodwill
N's share of goodwill=60,000×2/6=` 20,000
N's share of goodwill will be brought by O only.
Therefore, O's Capital A/c will be debited with ` 20,000
Question 22:
A, B, C and D
are partners in a firm sharing profits, in the ratio of 2 : 1 : 2 : 1. On the
retirement of C, Goodwill was valued ` 1,80,000. A, B
and D decide to share future profits equally. Pass the necessary
Journal entry for the treatment of goodwill.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit (`) |
Credit (`) |
|
|
B’s Capital A/c |
Dr |
|
30,000 |
|
|
D’s Capital A/c |
Dr. |
|
30,000 |
|
|
To C’s Capital A/c |
|
|
|
60,000 |
|
(Being Adjustment of C’s share of goodwill) |
|
|
|
|
|
|
|
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|
Working Notes:
WN1:Calculation of Gaining Ratio
A :B :C :D=2:1:2:1(Old ratio)
A :B :D =1:1:1(New ratio)
Gaining Ratio = New Ratio - Old Ratio
A's Gain =1/3−2/6=2−2/6=0
B's Gain =1/3−1/6=2−1/6=1/6
D's Gain =1/3−1/6=2−1/6=1/6
A:B:D=0:1:1
WN2: Calculation of Retiring Partner’s Share of Goodwill
C's share of goodwill=1,80,000×2/6=` 60,000
C's share of goodwill will be brought by B and D in their gaining ratio1:1
Therefore, B's Capital A/c will be debited with 60,000×1/2=` 30,000
And, D's Capital A/c will be debited with 60,000×1/2=` 30,000
Question 23
A, B and C were
partners in a firm sharing profits in the ratio of 6 : 5 : 4. Their capitals
were A − `
1,00,000; B − ` 80,000 and C − `
60,000 respectively. On 1st April, 2009, A retired from the firm and
the new profit sharing ratio between B and C was decided as 1
: 4. On A's retirement, the goodwill of the firm was valued at ` 1,80,000. Showing your calculations clearly, pass the
necessary Journal entry for the treatment of goodwill on A's
retirement.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit (`) |
Credit (`) |
|
|
C’s Capital A/c |
Dr. |
|
96,000 |
|
|
To A’s Capital A/c |
|
|
|
72,000 |
|
To B’s Capital A/c |
|
|
|
24,000 |
|
(Being Adjustment of A’s and B’s share of goodwill) |
|
|
|
|
|
|
|
|
|
Working Notes:
WN1: Calculation of Gaining Ratio
A :B :C=6:5:4(Old ratio)
B :C=1:4 (New ratio)
Gaining Ratio = New Ratio - Old Ratio
B's Gain =1/5−5/15=3−5/15=
−2/15(Sacrifice)
C's Gain =4/5−4/15=1/2−4/15=8/15
WN2: Calculation of Retiring Partner’s Share of Goodwill
A's share of goodwill=1,80,000×6/15=` 72,000
B's share of goodwill=1,80,000×2/15=` 24,000
A's and B's share of goodwill be brought by C only.Therefore, C's Capital A/c will be debited with 72,000+24,000 = ` 96,000
Question 24:
Sangeeta, Saroj
and shanti are partners sharing profits and losses in the ratio of 5 :
3 : 2. Z retired and on the date of his retirement, following
adjustments were agreed upon:
(a) The value of Furniture 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 depreciated by 10%.
(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.
(f) An item of `
1,000 included in bills payable is not likely to be claimed, hence should be
written back.
Pass necessary Journal entries.
Answer:
Revaluation
Account |
||||||
Dr. |
|
Cr. |
||||
Particulars |
` |
Particulars |
` |
|||
Stock A/c |
10,000 |
Furniture A/c |
12,000 |
|||
Machinery A/c |
5,000 |
Investments A/c |
10,000 |
|||
Provision for Doubtful Debts A/c |
2,000 |
Bills Payable A/c |
1,000 |
|||
Profit transferred to: |
|
|
|
|||
X’s Capital A/c |
3,000 |
|
|
|
||
Y’s Capital A/c |
1,800 |
|
|
|
||
Z’s Capital A/c |
1,200 |
6,000 |
|
|
||
|
23,000 |
|
23,000 |
|||
|
|
|
|
|||
Journal |
|||||
Date |
Particulars |
L.F. |
Debit |
Credit |
|
(a) |
Furniture A/c |
Dr. |
|
12,000 |
|
|
To
Revaluation A/c |
|
|
|
12,000 |
|
(Being Increase in value transferred to Revaluation
Account) |
|
|
|
|
|
|
|
|
|
|
(b) |
Revaluation A/c |
Dr. |
|
10,000 |
|
|
To Stock
A/c |
|
|
|
10,000 |
|
(Being Decrease in Stock transferred to Revaluation
Account) |
|
|
|
|
|
|
|
|
|
|
(c) |
Revaluation A/c |
Dr. |
|
5,000 |
|
|
To
Machinery A/c |
|
|
|
5,000 |
|
(Being Decrease in value of machinery transferred to
Revaluation Account) |
|
|
|
|
|
|
|
|
|
|
(d) |
Revaluation A/c |
Dr. |
|
2,000 |
|
|
To Provision for Doubtful
Debts A/c |
|
|
|
2,000 |
|
(Being Increase in liabilities to Revaluation Account) |
|
|
|
|
|
|
|
|
|
|
(e) |
Investments A/c |
Dr. |
|
10,000 |
|
|
To Revaluation A/c |
|
|
|
10,000 |
|
(Being Increase in value transferred to Revaluation
Account) |
|
|
|
|
|
|
|
|
|
|
(f) |
Bills Payable A/c |
Dr. |
|
1,000 |
|
|
To Revaluation A/c |
|
|
|
1,000 |
|
(Being Decrease in liabilities transferred to Revaluation
Account) |
|
|
|
|
|
|
|
|
|
|
(g) |
Revaluation A/c |
Dr. |
|
6,000 |
|
|
To X’s Capital A/c |
|
|
|
3,000 |
|
To Y’s Capital A/c |
|
|
|
1,800 |
|
To Z’s Capital A/c |
|
|
|
1,200 |
|
(Being Revaluation profit transferred to Partners’ Capital
Accounts) |
|
|
|
|
|
|
|
|
|
Question 25:
A, B and C were
partners, sharing profits and losses in the ratio of 2 : 2 : 1. B decides
to retire on 31st March, 2022. 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 B'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 `
5,000 to an injured employee.
Pass necessary Journal entries to record the above adjustments and prepare the
Revaluation Account.
Answer:
Revaluation
Account |
||||||
Dr. |
|
Cr. |
||||
Particulars |
( `) |
Particulars |
( `) |
|||
Plant and Machinery (40,000 × 10%) |
4,000 |
Building (1,00,000 × 20%) |
20,000 |
|||
Provision for Doubtful Debts |
1,000 |
Stock of Finished Goods |
5,000 |
|||
Stock of Raw Materials |
2,000 |
Computer |
2,000 |
|||
Workmen’s Compensation Claim |
5,000 |
|
|
|||
Profit transferred to: |
|
|
|
|||
A’s Capital A/c |
6,000 |
|
|
|
||
B’s Capital A/c |
6,000 |
|
|
|
||
C’s Capital A/c |
3,000 |
15,000 |
|
|
||
|
27,000 |
|
27,000 |
|||
|
|
|
|
|||
Journal |
||||
Particulars |
L.F. |
Debit ( `) |
Credit ( `) |
|
Building A/c |
Dr. |
|
20,000 |
|
Stock of Finished Good A/c |
Dr. |
|
5,000 |
|
Computer A/c |
Dr. |
|
2,000 |
|
To Revaluation A/c |
|
|
27,000 |
|
(Being Increase in value Assets transferred to Revaluation
Account) |
|
|
|
|
|
|
|
|
|
Revaluation A/c |
Dr. |
|
12,000 |
|
To Plant and Machinery A/c |
|
|
4,000 |
|
To Provision for Doubtful Debts A/c |
|
|
1,000 |
|
To Stock of Raw Material A/c |
|
|
2,000 |
|
To Workmen’s Compensation Claim A/c |
|
|
5,000 |
|
((Being Decrease in value of Assets and increase in
Liabilities transferred to Revaluation Account) |
|
|
|
|
|
|
|
|
|
Revaluation A/c |
Dr. |
|
15,000 |
|
To A’s Capital A/c |
|
|
6,000 |
|
To B’s Capital A/c |
|
|
6,000 |
|
To C’s Capital A/c |
|
|
3,000 |
|
((Being Revalution Profit
transferred to Partners’ Capital accounts) |
|
|
|
|
|
|
|
|
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