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12th | Retirement of a Partner | Question No.  21 To 25 | Ts Grewal Solution 2022-2023

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)

 

 

 

 

 

 

 

 

 

 

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;   ` 80,000 and  ` 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

Click on below links for 

12th TS Grewal’s Accountancy Solutions

Ts Grewal Solution 2022-2023

Ts Grewal Solution 2021-2022

Ts Grewal Solution 2020-2021