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12th | Retirement Of A Partner | Question No. 26 To 30 | Ts Grewal Solution 2023-2024

Question 26:


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 27:


A, B and C were partners, sharing profits and losses in the ratio of 2 : 2 : 1. B decides to retire on 31st March, 2023. 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)

 

 

 

 

 

 

 

 

Question 28: Punit, Ramit and Akshit were partners sharing profits equally. Akshit retired on 1st April, 2023. 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

(`)

Revised Values

(`)

Land

5,50,000

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.

Answer:


 

Punit

 

Ramit

 

Akshit

Old Ratio

1

:

1

:

1

New Ratio

3

:

2

:

Retired

 

Punit = 1/3-3/5=5-9/15= -4/15 (Gain)

Ramit = 1/3-2/5=5-6/15= -1/15 (Gain)

Akshat = 1/3-0/5=5-0/15= 5/15 =1/3 (Sacrifice)

 

SHARE OF SACRIFICE FOR AKSHAT, RETIRING PARNTER

Sacrificing ratio of Akshat is 1/3

Compensating amount =1,35,,000×1/3=45,000

 

Share of Compensating amount by Punit and Ramit in sacrificing ratio (4:1)

Punit= 45,000×4/5=36,000

Ramit= 45,000×1/5=9,000

 

An adjustment entry

Particulars

Dr. `

Cr. `

Punit’s Capital A/c          Dr.

Ronit’s Capital A/c          Dr.

    To Akshat’s Capital A/c

36,000

9,000

 

 

45,000

 

Question 29:


X, Y and Z are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Z retires from the firm on 31st March, 2023. On the date of Z's retirement, the following balances appeared 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.

 

Answer:


Journal

Date

Particulars

L.F.

Debit

 (`)

Credit

 (`)

2023
Mar.31

 

General Reserve A/c


Dr.

 


1,80,000

 

 

Workmen Compensation Reserve A/c

Dr.

 

24,000

 

 

  To X’s Capital A/c

 

 

 

1,02,000

 

  To Y’s Capital A/c

 

 

 

68,000

 

  To Z’s Capital A/c

 

 

 

34,000

 

((Being Accumulated profits distributed among partners in old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

15,000

 

 

Y’s Capital A/c

Dr.

 

10,000

 

 

Z’s Capital A/c

Dr.

 

5,000

 

 

  To Profit and Loss A/c

 

 

 

30,000

 

((Being Debit balance in Profit and Loss A/c distributed among partners in old ratio)

 

 

 

 

 

 

 

 

 

 

 

Working Notes:

WN1: Calculation of Share in Credit Balance of Reserves

Total Credit Balance of Reserves

= General Reserve + WCF

= 1,80,000 + 24,000 = 2,04,000

X‘s share= 2,04,000××3/6 =1,02,000

Y‘s share= 2,04,000××2/6 =68,000

Z‘s share= 2,04,000××1/6 =34,000                     

 

WN2: Calculation of Share in Debit Balance of Profit and Loss A/c

X‘s share= 30,000××3/6 =15,000

Y‘s share= 30,000××2/6 =10,000

Z‘s share= 30,000××1/6 =5,000                

 

Note: Employees’ Provident Fund will not be distributed as it is a liability and not accumulated profit.

 

Question 30:


Asha, Naveen and Shalini were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Goodwill appeared in their books at a value of  ` 80,000 and General Reserve at  ` 40,000. Naveen decided to retire from the firm. On the date of his retirement, goodwill of the firm was valued at  ` 1,20,000. The new profit-sharing ratio decided among Asha and Shalini is 2 : 3.
Record necessary Journal entries on Naveen's retirement.

 

Answer:


Journal

Date

Particulars

L.F.

Debit

(
`)

Credit

 (`)

 

 Asha’s Capital A/c

Dr.

 

40,000

 

 

 Naveen’s Capital A/c

Dr.

 

24,000

 

 

 Shalini’s Capital A/c

Dr.

 

16,000

 

 

            To Goodwill A/c

 

 

 

80,000

 

 (Being Existing goodwill written off amongst existing partners in old ratio)

 

 

 

 

 

 

 

 

 

 

 

 General Reserves A/c

Dr.

 

40,000

 

 

            To Asha’s Capital A/c

 

 

 

20,000

 

            To Naveen’s Capital A/c

 

 

 

12,000

 

            To Shalini’s Capital A/c

 

 

 

8,000

 

 (Being General Reserves distributed  among all partners in old ratio)

 

 

 

 

 

 

 

 

 

 

 

 Shalini’s Capital A/c

Dr.

 

 48,000

 

 

            To Asha’s Capital A/c

 

 

 

 12,000

 

            To Naveen’s Capital A/c

 

 

 

 36,000

 

 (Being Goodwill adjusted by debiting gaining partner and crediting sacrificing partner and retiring partner)

 

 

 

 

 

 

 

 

 



Calculation of Gaining Ratio:

Gain of a Partner=New Share - Old Shares

Asha's Gain (Sacrifice): 2/5-5/10=4-5/10=(-)1/10

Shalini's Gain (Sacrifice): 3/5-2/10=6-2/10=4/10

Therefore, Both Asha and Naveen would be compensated by Shalini in the ratio of 1:3

Asha's Sacrifice for 1/10th Share=1,20,000×1/10=12,000

Naveen's Sacrifice for 3/10th Share= 1,20,000×3/10=36,000

 

 

Ts Grewal Solution 2023-2024

Click below for more Questions

Class 12 / Volume – I

Chapter 5 – Retirement of a Partner

 

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 60