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:
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Revaluation Account |
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|
Dr. |
|
Cr. |
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Particulars |
₹ |
Particulars |
₹ |
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Stock A/c |
10,000 |
Furniture A/c |
12,000 |
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Machinery A/c |
5,000 |
Investments A/c |
10,000 |
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Provision for Doubtful Debts A/c |
2,000 |
Bills Payable A/c |
1,000 |
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Profit transferred to: |
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X’s Capital A/c |
3,000 |
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Y’s Capital A/c |
1,800 |
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Z’s Capital A/c |
1,200 |
6,000 |
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23,000 |
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23,000 |
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Journal |
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Date |
Particulars |
L.F. |
Debit |
Credit |
|
|
(a) |
Furniture A/c |
Dr. |
|
12,000 |
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To Revaluation A/c |
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|
12,000 |
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(Being Increase in value transferred to Revaluation Account) |
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(b) |
Revaluation A/c |
Dr. |
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10,000 |
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To Stock A/c |
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10,000 |
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(Being Decrease in Stock transferred to Revaluation Account) |
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(c) |
Revaluation A/c |
Dr. |
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5,000 |
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To Machinery A/c |
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5,000 |
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(Being Decrease in value of machinery transferred to Revaluation Account) |
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(d) |
Revaluation A/c |
Dr. |
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2,000 |
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To Provision for Doubtful Debts A/c |
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2,000 |
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(Being Increase in liabilities to Revaluation Account) |
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(e) |
Investments A/c |
Dr. |
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10,000 |
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To Revaluation A/c |
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10,000 |
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(Being Increase in value transferred to Revaluation Account) |
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(f) |
Bills Payable A/c |
Dr. |
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1,000 |
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To Revaluation A/c |
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1,000 |
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(Being Decrease in liabilities transferred to Revaluation Account) |
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(g) |
Revaluation A/c |
Dr. |
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6,000 |
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To X’s Capital A/c |
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3,000 |
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To Y’s Capital A/c |
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|
1,800 |
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To Z’s Capital A/c |
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1,200 |
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(Being Revaluation profit transferred to Partners’ Capital Accounts) |
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Question 27:
Leena,
Madan and Naresh
were partners, sharing profits and losses in the ratio of 2 : 2 : 1. Madan
decides to retire on 31st March, 2026. 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 |
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|
Dr. |
|
Cr. |
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Particulars |
(₹) |
Particulars |
(₹) |
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Plant and Machinery (40,000 × 10%) |
4,000 |
Building (1,00,000 × 20%) |
20,000 |
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Provision for Doubtful Debts |
1,000 |
Stock of Finished Goods |
5,000 |
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Stock of Raw Materials |
2,000 |
Computer |
2,000 |
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Workmen’s Compensation Claim |
5,000 |
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Profit transferred to: |
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Leena’s Capital A/c |
6,000 |
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Madan’s Capital A/c |
6,000 |
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Naresh’s Capital A/c |
3,000 |
15,000 |
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27,000 |
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27,000 |
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Journal |
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Particulars |
L.F. |
Debit (₹) |
Credit (₹) |
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Building A/c |
Dr. |
|
20,000 |
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Stock of Finished Good A/c |
Dr. |
|
5,000 |
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Computer A/c |
Dr. |
|
2,000 |
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To Revaluation A/c |
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27,000 |
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(Being Increase in value Assets transferred to Revaluation Account) |
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Revaluation A/c |
Dr. |
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12,000 |
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To Plant and Machinery A/c |
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4,000 |
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To Provision for Doubtful Debts A/c |
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1,000 |
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To Stock of Raw Material A/c |
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2,000 |
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To Workmen’s Compensation Claim A/c |
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5,000 |
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((Being Decrease in value of Assets and increase in Liabilities transferred to Revaluation Account) |
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Revaluation A/c |
Dr. |
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15,000 |
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To Leena’s Capital A/c |
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6,000 |
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To Madan’s Capital A/c |
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6,000 |
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To Naresh’s Capital A/c |
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3,000 |
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((Being Revalution Profit transferred to Partners’ Capital accounts) |
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Question 28:
Punit, Ramit and Akshit were partners sharing profits equally. Akshit retired on 1st April, 2026. 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, 2026. 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 |
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Date |
Particulars |
L.F. |
Debit (₹) |
Credit (₹) |
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|
2026 |
General Reserve A/c |
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Workmen Compensation Reserve A/c |
Dr. |
|
24,000 |
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To X’s Capital A/c |
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1,02,000 |
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To Y’s Capital A/c |
|
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68,000 |
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To Z’s Capital A/c |
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34,000 |
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((Being Accumulated profits distributed among partners in old ratio) |
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X’s Capital A/c |
Dr. |
|
15,000 |
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Y’s Capital A/c |
Dr. |
|
10,000 |
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Z’s Capital A/c |
Dr. |
|
5,000 |
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To Profit and Loss A/c |
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30,000 |
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((Being Debit balance in Profit and Loss A/c distributed among partners in old ratio) |
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Working Notes:
WN1: Calculation of Share in Credit Balance of Reserves
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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:
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Journal |
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Date |
Particulars |
L.F. |
Debit |
Credit (₹) |
|
|
|
Asha’s Capital A/c |
Dr. |
|
40,000 |
|
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Naveen’s Capital A/c |
Dr. |
|
24,000 |
|
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Shalini’s Capital A/c |
Dr. |
|
16,000 |
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To Goodwill A/c |
|
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|
80,000 |
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(Being Existing goodwill written off amongst existing partners in old ratio) |
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General Reserves A/c |
Dr. |
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40,000 |
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To Asha’s Capital A/c |
|
|
|
20,000 |
|
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To Naveen’s Capital A/c |
|
|
|
12,000 |
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To Shalini’s Capital A/c |
|
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|
8,000 |
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(Being General Reserves distributed among all partners in old ratio) |
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Shalini’s Capital A/c |
Dr. |
|
48,000 |
|
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To Asha’s Capital A/c |
|
|
|
12,000 |
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To Naveen’s Capital A/c |
|
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|
36,000 |
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(Being Goodwill adjusted by debiting gaining partner and crediting sacrificing partner and retiring partner) |
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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 2026-2027
Click below for more Questions
Class 12 / Volume – I
Chapter 5 – Retirement of a Partner