Question 26:
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
Question 27:
X, Y and Z were equal partners in a firm. On 31st March, 2024, their Balance Sheet was as follows:
|
Liabilities |
` |
Assets |
` |
|
Creditors |
77,000 |
Bank |
47,000 |
|
General Reserve |
26,000 |
Debtors |
23,000 |
|
Workmen Compensation Reserve |
32,000 |
Stock |
1,10,000 |
|
Capital A/cs: |
|
Investments |
17,000 |
|
X 60,000 |
|
Furniture |
10,000 |
|
Y 40,000 |
|
Machinery |
35,000 |
|
N 20,000 |
1,20,000 |
Profit & Loss A/c |
11,000 |
|
|
|
Advertisement Suspense A/c |
2,000 |
|
|
2,55,000 |
|
2,55,000 |
On the above date, Z retires from the firm and X and Y decided to share future profits in the ratio of 3 :2 Partners decide to show accumulated profits, losses and reserves in the Balance Sheet of the reconstituted firm at their original values.
Pass an 'Adjustment Entry' for the treatment of accumulated profits, losses and reserves.
Answer:
|
Date |
Particulars |
|
Dr. (`) |
Cr. (`) |
|
|
X’s Capital A/c |
Dr. |
12,000 |
|
|
|
Y's Capital A/c |
Dr. |
3,000 |
|
|
|
To
Z's Capital A/c |
|
|
15,000 |
|
|
(Being accumulated profits, losses and reserve adjusted) |
|
|
|
Working Note:
Net effect of accumulated profits, losses and reserve
|
General Reserve |
26,000 |
|
Workmen Compensation Reserve |
32,000 |
|
|
58,000 |
|
Less: |
|
|
Profit & Loss A/c |
11,000 |
|
Advertisement Suspense |
2,000 |
|
|
45,000 |
Note; Above amount is to be adjusted in Gaining sacrificing ratio
|
X = |
45,000 |
× |
4/15 |
= |
12,000 |
|
Y = |
45,000 |
× |
1/15 |
= |
3,000 |
|
Z = |
45,000 |
× |
5/15 |
= |
15,000 |
Gaining sacrificing
ratio
|
|
Old Ratio |
- |
New ratio |
= |
(-) Gain/(+) Sacrifice |
||
|
X = |
1/3 |
- |
3/5 |
= |
5-9/15 |
= |
-4/15 |
|
Y = |
1/3 |
- |
2/5 |
= |
5-6/15 |
= |
-1/15 |
|
Z = |
1/3 |
- |
0/5 |
= |
5-0/15 |
= |
5/15 |
Question 28:
Partnership
Deed of C and D, who are equal partners, has a clause that
any partner may retire 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 of the average profit of the three preceding completed
years.
(c) half the amount of the goodwill of the firm
calculated at 11/2 times the average profit of the three
preceding completed years.
C gave a notice on 31st March, 2023 to retire on 30th September,
2023, when the balance of his Capital Account was ` 6,000 and his Current Account
(Dr.)
` 500. Profits for the three preceding completed years
ended 31st March, were: 2021 − `
2,800; 2022 − `
2,200 and 2023 − `
1,600. What amount is due to C as per the partnership
agreement?
Answer:
|
C’s Capital Account |
|||||
|
Dr. |
|
Cr. |
|||
|
Particulars |
` |
Particulars |
` |
||
|
C’s
Loan A/c |
7,700 |
Balance
b/d |
6,000 |
||
|
|
|
C’s
Current A/c |
1,700 |
||
|
|
7,700 |
|
7,700 |
||
|
|
|
|
|
||
|
C’s Current Account |
|||||
|
Dr. |
|
Cr. |
|||
|
Particulars |
` |
Particulars |
` |
||
|
Balance
b/d |
500 |
Profit
and Loss Suspense A/c (Share of profit) (WN 1) |
550 |
||
|
C’s
Capital A/c (balancing figure) |
1,700 |
D’s
Current A/c (Share of goodwill) (WN 2) |
1,650 |
||
|
|
2,200 |
|
2,200 |
||
|
|
|
|
|
||
Working Notes:
WN 1 Calculation of Profit (from April 01, 2023
to Sept. 30, 2023)
Average profit = total profit of past
given years/number of years
Average
profit =2,800+2,200+1,600/3=2,200
C’s share of profit (for last 6 month)=Average
profit×C’s share×6/12
=2,200×1/2×6/12=550
WN 2 Calculation
of Goodwill
Goodwill = Average Profit × 1.5
= 2,200 × 1.5 = ` 3,300
C’s Share of Goodwill =3,300×1/2=1650
Question 29:
Alfa, Beta and Gama are in partnership sharing profits in the ratio of 5:3:2.Their Balance Sheet on 1st April, 2024, the day Beta decided to retire from firm, was as follows:
|
Liabilities |
` |
Assets |
` |
|
Alfa's Capital |
3,00,000 |
Building |
2,50,000 |
|
Beta's Capital |
2,00,000 |
Machinery |
1,50,000 |
|
Gama's Capital |
2,00,000 |
Investments |
2.50,000 |
|
General Reserve |
1,00,000 |
Debtors |
1,00,000 |
|
Sundry Creditors |
1,00,000 |
Stock |
50,000 |
|
|
|
Cash at Bank |
1,00,000 |
|
|
9,00,000 |
|
9,00,000 |
The terms of retirement were:
(i) Beta takes goodwill from Alfa for ` 30,000 and from Gama for ` 40,000 for foregoing his share of profits.
(ii) Stock to be appreciated by 20% and building by 50,000.
(iii) Investments were sold for 2,70,000.
(iv) Beta is paid by bank draft.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.
Answer:
|
Revaluation A/c |
|||
|
Particulars |
` |
Particulars |
` |
|
Gain |
|
Building |
50,000 |
|
Capital A/cs: |
|
Investments |
20,000 |
|
Alfa's 40,000 |
|
Stock |
10,000 |
|
Beta's 24,000 |
|
|
|
|
Gama's 16,000 |
80,000 |
|
|
|
|
80,000 |
|
80,000 |
|
Capital A/c |
|||||||
|
Particulars |
Alfa |
Beta |
Gama |
Particulars |
Alfa |
Beta |
Gama |
|
To Beta's Capital A/c |
30,000 |
- |
40,000 |
By Balance B/d |
3,00,000 |
2,00,000 |
2,00,000 |
|
To Bank A/c |
- |
3,24,000 |
- |
By Revaluation A/c |
40,000 |
24,000 |
16,000 |
|
To Balance C/d |
3,60,000 |
- |
1,96,000 |
By General Reserve |
50,000 |
30,000 |
20,000 |
|
|
|
|
|
By Alfa's Capital A/c |
- |
30,000 |
- |
|
|
|
|
|
By Gama's Capital A/c |
- |
40,000 |
- |
|
|
3,90,000 |
3,24,000 |
2,36,000 |
|
3,90,000 |
3,24,000 |
2,36,000 |
|
Balance Sheet |
|||
|
Liabilities
|
` |
Assets |
` |
|
Alfa's
Capital |
3,60,000 |
Building |
3,00,000 |
|
Beta's
Capital |
1,96,000 |
Machinery |
1,50,000 |
|
Sundry
Creditors |
1,00,000 |
Debtors |
1,00,000 |
|
|
|
Stock |
60,000 |
|
|
|
Cash at
Bank |
46,000 |
|
|
|
|
|
|
|
9,00,000 |
|
9,00,000 |
Question 30:
Kanika, 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 |
(`) |
Assets |
(`) |
||
|
Trade
creditors |
53,000 |
Bank |
60,000 |
||
|
Employees' Provident Fund |
47,000 |
Debtors |
60,000 |
||
|
Kanika's Capital |
2,00,000 |
Stock |
1,00,000 |
||
|
Disha's Capital |
1,00,000 |
Fixed assets |
2,40,000 |
||
|
Kabir's Capital |
80,000 |
Profit and Loss A/c |
20,000 |
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
4,80,000 |
|
4,80,000 |
||
|
|
|
|
|
||
|
|
|
|
|
|
|
Kanika retired on 1st April, 2016. For
this purpose, the following adjustments were agreed upon:
(a) 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.
(c) Stock was to be valued at 120%.
(d) 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.
(AI 2017 C)
Answer:
|
Revaluation Account |
|||||
|
Dr. |
Cr. |
||||
|
Particulars |
` |
Particulars |
` |
||
|
Revaluation Profit |
|
Fixed Assets |
60,000 |
||
|
Kanika’s Capital |
40,000 |
|
Stock |
20,000 |
|
|
Disha’s Capital |
20,000 |
|
|
|
|
|
Kabir’s Capital |
20,000 |
80,000 |
|
|
|
|
|
80,000 |
|
80,000 |
||
|
|
|
|
|
||
|
Partners’ Capital Account |
||||||||
|
Dr. |
Cr. |
|||||||
|
Particulars |
Kanika |
Disha |
Kabir |
Particulars |
Kanika |
Disha |
Kabir |
|
|
Profit & Loss A/c |
10,000 |
5,000 |
5,000 |
Balance b/d |
2,00,000 |
1,00,000 |
80,000 |
|
|
Kanika’s
Capital A/c |
|
35,000 |
35,000 |
Disha’s
Capital A/c |
35,000 |
|
|
|
|
Kanika’s
Loan A/c |
3,00,000 |
|
|
Kabir’s
Capital A/c |
35,000 |
|
|
|
|
Balance c/d |
|
80,000 |
60,000 |
Revaluation |
40,000 |
20,000 |
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3,10,000 |
1,20,000 |
1,00,000 |
|
3,10,000 |
1,20,000 |
1,00,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet as on March 31,
2016 |
||||
|
Liabilities |
(`) |
Assets |
(`) |
|
|
Employees’ Provident Fund |
47,000 |
Bank |
60,000 |
|
|
Trade Creditors |
53,000 |
Sundry Debtors |
60,000 |
|
|
Kanika’s Loan A/c |
3,00,000 |
Stock |
1,20,000 |
|
|
Capitals |
|
Fixed Assets |
3,00,000 |
|
|
Disha |
80,000 |
|
|
|
|
Kabir |
60,000 |
1,40,000 |
|
|
|
|
5,40,000 |
|
5,40,000 |
|
|
|
|
|
|
|
Working Notes:
WN1: Calculation of Goodwill
Goodwill=Average Profits×Number of Years' Purchase
Average Profits=Total ProfitsNumber of Years=1,00,000+1,30,000−20,000/3=2,10,000/3=` 70,000
Goodwill=70,000×2=` 1,40,000
Kanika's share=1,40,000×2/4=70,000 (to be borne by gaining partners in gaining ratio)
Note: Since no information is given about the share of gain,
it is assumed that the old partners are gaining in their old profit sharing
ratio.
Ts Grewal Solution 2024-2025
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Class 12 / Volume – I