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12th | Retirement Of A Partner | Question No. 36 To 40 | Ts Grewal Solution 2023-2024

Question 36: Ashok, Bhaskar and Chaman are partners in a firm, sharing profits and losses as Ashok 1/3, Bhaskar 1/2, and Chaman 1/6 respectively. The Balance Sheet of the firm as at 31st March, 2023 was


Liabilities

`

Assets

`

Capital A/cs:

 

 

Building

 

5,00,000

Ashok

3,00,000

 

Plant and Machinery

 

4,00,000

Bhaskar

4,00,000

 

Furniture

 

1,00,000

Chaman

2,50,000

9,50,000

Stock

 

2,50,000

General Reserve

 

2,20,000

Debtors

1,80,000

 

Sundry Creditors

 

2,50,000

Less: Provision for Doubtful Debts

5,000

1,75,000

Loan Payable

 

1,50,000

Cash in Hand

 

85,000

 

 

 

Advertisement Suspense Account

 

60,000

 

 

15,70,000

 

 

15,70,000

Chaman retired on 1st April, 2023 subject to the following adjustments:

(a) Goodwill of the firm be valued at `2,40,000. Chaman's share of goodwill be adjusted into the Capital Accounts of Ashok and Bhaskar who will share future profits in the ratio of 3:2.

(6) Plant and Machinery to be reduced by 10% and Furniture by 5%.

(c) Stock to be increased by 15% and Building by 10%.

(d) Provision for Doubtful Debts to be raised to `20,000.

Prepare Revaluation Account, Capital Account of Chaman and the Balance Sheet of the firm after Chaman's retirement.

 

Answer:


Profit and loss adjustment a/c

Dr.

 

 

Cr.

Particulars

`

Particulars

`

To  Plan and machinery

To Furniture

To Prov. for doubtful debts

To capital a/c

(profit transferred to)

Ashok =27,500×2/6= 9,167

Bhaskar=27,500×3/6=13,750

Chaman =27,500×1/6=4,583

40,000

5,000

15,000

 

 

 

 

27,500

By stock

By factory building

37,500

50,000

 

87,500

 

87,500

1

Partners’ Capital Account 

Dr.

Cr.

Particulars

Ashok

Bhaskar

Chaman

Particulars

Ashok

Bhaskar

Chaman

B’s Capital A/c

24,000

Balance b/d

3,00,000

4,00,000

2,50,000

C’s Capital A/c

40,000

A’s Capital A/c

24,000

40,000

Advertisement sus. a/c

C’s loan a/c

20,000

 

30,000

10,000

 

3,21,250

Profit and loss adjustment a/c

General reserve a/c

9,167

 

73,333

13,750

 

1,10,000

4,583

 

36,667

Balance c/d

2,98,500

5,17,750

 

 

3,82,500

5,47,750

3,31,250

 

3,82,500

5,47,750

3,31,250

 

 

 

 

 

 

 

 

 

 

Balance Sheet

 

as on April 01, 2023 (after C’s Retirement)

 

Liabilities

Amount

(`)

Assets

Amount

(`)

 

Sundry Creditors

2,50,000

Factory building

5,50,000

 

Loan Payable

1,50,000

Plant and machinery

3,60,000

 

C’s Loan

3,21,250

Furniture

95,000

 

Stock

2,87,500

 

Capital A/c

 

Debtors     1,80,000

 

Ashok

2,98,500

 

Less;

prov.           20,000

 

1,60,000

 

Bhaskar

5,17,750

3,54,000

Cash     

85,000

 

 

15,37,500

 

15,37,500

 

 

 

 

 

Journal

 

Date

Particulars

L.F.

Debit

 (`)

Credit

 (`)

 

 

Ashok’s Capital A/c

Dr.

 

64,000

 

 

 

    To Bhaskar’s Capital A/c

 

 

 

24,000

 

 

    To Chaman’s Capital A/c

 

 

 

40,000

 

 

(Being goodwill adjusted for compensating bhaskar, Chaman)

 

 

 

 

 

 

 

 

 

 

 

 Profit and loss adjustment a/c

Dr.

 

60,000

 

 

 

   To Plant and machinery A/c

 

40,000 

 

 

   To  Furniture A/c

 

 5,000

 

 

   To Prov. for doubtful debts  A/c 

 

 

15,000

 

 

(Decrease in assets and increase in liabilities debited to Revaluation A/c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 N’s Capital A/c

Dr.

 

18,000

 

 

 

 S’s Capital A/c

Dr.

 

27,000

 

 

 

     To G’s Capital A/c

 

 

 

45,000

 

 

(Goodwill adjusted in gaining ratio)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock A/c

Dr.

 

37,500

 

 

Factory building  A/c

Dr.

 

50,000

 

 

To P&L adjustment  A/c

 

87,500

 

 

(Decrease in assets debited to Revaluation A/c)

 

 

 

 

 

 

 

 

 

Working notes;

Old ratio of Ashok : Bhaskar : chaman=1/3:1/2:1/6

=1/3×2/2:1/2×3/3=1/6

=2/6:3/6:1/6

=2:3:1

New ratio of Ashok and Bhaskar= 3:2

Gaining ratio= New ratio – old ratio

Ashok = 3/5-2/6=18-10/30=8/30

Bhaskar= 2/5-3/6=12-15/30= -3/30

Goodwill of firm= 2,40,000

Bhaskar will get =2,40,000×3/30=24,000

Chaman’s share of goodwill = 2,40,000×1/6=40,000

Ashok will give Bhaskar and  chaman 24,000, 40,000 respectively.

 

Question 37: Chintan, Ayush and Sudha were partners in a firm sharing profits and losses in the ratio of 5: 3:2. On 31st March, 2019, their Balance Sheet was as follows:


BALANCE SHEET OF CHINTAN, AYUSH AND SUDHA as at 31st March, 2019

Liabilities

`

Assets

`

Capitals:

 

Plant and Machinery

 

90,000

Chintan

90,000

 

Furniture

 

60,000

Ayush

60,000

 

Stock

 

30,000

Sudha

40,000

1,90,000

Debtors

60,000

 

Provident Fund

 

30,000

Less: Provision for Doubtful Debts

5,000

55,000

General Reserve

 

20,000

Cash at Bank

 

15,000

Creditors

 

10,000

 

 

 

 

 

2,50,000

 

 

2,50,000

Chintan retired on the above date and it was agreed that:

(a) Debtors of `5,000 were to be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts was to be created.

(b) Goodwill of the firm on Chintan's retirement was valued at `1,00,000 and Chintan's share of the same will be adjusted by debiting the Capital Accounts of Ayush and Sudha.

(c) Stock was revalued at `36,000.

(d) Furniture was undervalued by `9,000.

(e) Liability for Workmen's Compensation of `2,000 was to be created.

(f) Chintan was to be paid `20,000 by cheque and the balance was to be transferred to his loan account.

Pass the necessary Journal entries in the books of the firm on Chintan's retirement.

(CBSE 2020 C)

Answer:


Date

Particulars

L.F.

Dr. (`)

Cr. (`)

 

Stock A/c

Furniture A/c

Provision A/c

  To Revolution  A/c

(Being Decrease in the Value of Liabilities and increase in the value of Assets)

Dr.

Dr.

Dr.

 

6,000

9,000

2,250

 

 

 

17,250

 

Revaluation A/c

  To Bad debts A/c

  To Liabilities for Worker compensation A/c

(Being Decrease in the Value of Assets and increase in the value of Liabilities)

Dr.

 

7,000

 

5,000

2,000

 

Revaluation A/c

  To Chintan’s Capital A/c

  To Ayush’s Capital A/c

  To Sudha’s Capital A/c

(being gain of revaluation Account transferred to Capital accounts)

Dr.

 

10,250

 

5,125

3,075

2,050

 

General Reserve A/c

  To Chintan’s Capital A/c

  To Ayush’s Capital A/c

  To Sudha’s Capital A/c

(being gain of General Reserves transferred to Capital accounts)

Dr.

 

20,000

 

10,000

6,000

4,000

 

Ayush’s Capital A/c

Sudha’s Capital A/c

  To Chintan’s Capital A/c

(Being Retiring Partner compensated)

Dr.

Dr.

 

30,000

20,000

 

 

50,000

 

Chintan’s Capital A/c

  To Bank A/c

(Being Chintan was paid `20,000 through cheque)

Dr.

 

20,000

 

20,000

 

Chintan’s Capital A/c

  To  Chintan’s  Loan A/c

(Being balance of Capital transferred to His loan Account)

Dr.

 

1,35,125

 

1,35,125

 

Question 38:


A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 3. Their Balance Sheet as at 31st March, 2023 is:

Liabilities

 (`)

Assets

 (`)

Creditors

7,000

Land and Building

36,000

Bills Payable

3,000

Plant and Machinery

28,000

Reserves

20,000

Computer Printer

8,000

Capital A/cs:

 

Stock

20,000

A

32,000

 

Sundry Debtors

14,000

 

B

24,000

 

Less: Provision for Doubtful Debts

2,000

12,000

C

20,000

76,000

Bank

2,000

 

 

 

 

 

 

1,06,000

 

1,06,000

 

 

 

 


On 1st April, 2023, B retired from the firm on the following terms:
(a) Goodwill of the firm is to be valued at 
` 14,000.
(b) Stock, Land and Building are to be appreciated by 10%.
(c) Plant and Machinery and Computer Printer are to be reduced by 10%.
(d) Sundry Debtors are considered to be good.
(e) There is a liability of 
` 2,000 for the payment of outstanding salary to the employees of the firm. This liability was not provided in the Balance Sheet but the same is to be recorded now.
(f) Amount payable to B is to be transferred to his Loan Account.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of A and C after B's retirement.

 

Answer:


Revaluation Account

Dr.

 

Cr.

Particulars

 (`)

Particulars

 (`)

Plant and Machinery
(28,000 × 10%)

2,800

Stock
(20,000 × 10%)

2,000

Electronic Typewriter
(8,000 × 10%)

800

Land and Building
(36,000 × 10%)

3,600

Outstanding Salary

2,000

Provision for Doubtful Debts

2,000

Profit transferred to:

 

 

 

A’s Capital A/c

800

 

 

 

B’s Capital A/c

600

 

 

 

C’s Capital A/c

600

2,000

 

 

 

 

 

 

 

7,600

 

7,600

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c

2,400

 

1,800

Balance b/d

32,000

24,000

20,000

B’s Loan A/c

 

34,800

 

Reserves

8,000

6,000

6,000

Balance c/d

38,400

 

24,800

Revaluation A/c

800

600

600

 

 

 

 

A’s Capital A/c

 

2,400

 

C’s Capital A/c

 

1,800

 

 

40,800

34,800

26,600

 

40,800

34,800

26,600

 

 

 

 

 

 

 

 

 

Balance Sheet

an on April 01, 2023 (after B’s Retirement)

Liabilities

 (`)

Assets

 (`)

Creditors

7,000

Land and Building

(36,000 + 3,600)

39,600

Bills Payable

3,000

Plant and Machinery

(28,000 – 2,800)

25,200

B’s Loan

34,800

Electronic Typewriter

8000 – 800)

7,200

Capital A/c:

 

Stock (20,000 + 2,000)

22,000

A

38,400

Sundry Debtors

14,000

C

24,800

Bank

2000

Outstanding Salary

2,000

 

 

 

1,10,000

 

1,10,000

 

 

 

 

 

Working Note:


Adjustment of Goodwill
Old Ratio (A, B and C) = 4 : 3 : 3
B retires from the firm.
Gaining Ratio = 4 : 3


Goodwill of the firm =
` 14,000
B’s Share of Goodwill =
14,000×3/10=42,000

 

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 4 : 3).
A‘s share
= 4,200×4/7=2,400

C‘s share= 4,200×3/7=1,800

 

Question 39:


X, Y and Z are partners sharing profits and losses in the ratio of 3 : 2 : 1. Balance Sheet of the firm as at 31st March, 2022 was as follows:

Liabilities

 (`)

Assets

 (`)

Creditors

21,000

Cash at Bank

5,750

Workmen Compensation Reserve

12,000

Debtors

40,000

 

Investments Fluctuation Reserve

6,000

Less: Provision for Doubtful Debts

2,000

38,000

Capital A/cs:

 

Stock

 

30,000

X

68,000

 

Investment

(Market Value  ` 17,600)

15,000

Y

32,000

 

Patents

10,000

Z

21,000

1,21,000

Machinery

50,000

 

 

Goodwill

6,000

 

 

Advertisement Expenditure

5,250

 

 

 

 

 

 

1,60,000

 

1,60,000

 

 

 

 

 
Z retired on 1st April, 2022 on the following terms:
(a) Goodwill of the firm is to be valued at 
` 34,800.
(b) Value of Patents is to be reduced by 20% and that of machinery to 90%.
(c) Provision for doubtful debts is to be created @ 6% on debtors.
(d) Z took over the investment at market value.
(e) Liability for Workmen Compensation to the extent of 
` 750 is to be created.
(f) A liability of 
` 4,000 included in creditors is not to be paid.
(g) Amount due to Z to be paid as follows:
 ` 5,067 immediately, 50% of the balance within one year and the balance by a draft for 3 Months.
Give necessary Journal entries for the treatment of goodwill, prepare Revaluation Account, Capital Accounts and the Balance Sheet of the new firm.

 

Answer:


Journal

Date
 

Particulars

L.F.

Debit

 (`)

Credit

 (`)

2023

 

 

 

 

 

April 01

X’s Capital A/c

Dr.

 

3,000

 

 

Y’s Capital A/c

Dr.

 

2,000

 

 

Z’s Capital A/c

Dr.

 

1,000

 

 

            To Goodwill A/c

 

 

 

6,000

 

(Existing goodwill written off)

 

 

 

 

 

 

 

 

 

 

April 01

X’s Capital A/c

Dr.

 

3,480

 

 

Y’s Capital A/c

Dr.

 

2,320

 

 

            To Z’s Capital A/c

 

 

 

5,800

 

(Z’s share of goodwill credited to him and gaining partners debited in gaining ratio)

 

 

 

 

 

 

 

 

 

 

 

 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

(`)

Particulars

Amount

(`)

Patents

2,000

Investments

(17,600 – 15,000)

2,600

Machinery

5,000

Creditors

4,000

Prov. for Doubtful Debts

400

Loss on Revaluation transferred

 

 

 

X’s Capital A/c

400

 

 

 

Y’s Capital A/c

267

 

 

 

Z’s Capital A/c

133

800

 

 

 

 

 

7,400

 

7,400

 

 

 

 

 

 

 

 

 

 

 

  

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Goodwill A/c

3,000

2,000

1,000

Balance b/d

68,000

32,000

21,000

Revaluation A/c

400

267

133

X’s Capital A/c

-

-

3,480

Z’s Capital A/c

3,480

2,320

-

Y’s Capital A/c

-

-

2,320

Advertisement Expenditure A/c

2,625

1,750

875

Workmen Compensation Reserve A/c*

5,625

3,750

1,875

Investments A/c

-

-

17,600

Investment Fluctuation Reserve A/c*

3,000

2,000

1,000

Bank A/c

-

-

5,067

 

 

 

 

Z’s Loan A/c

-

-

2,500

 

 

 

 

Bills Payable A/c

-

-

2,500

 

 

 

 

Balance c/d

67,120

31,413

-

 

 

 

 

 

76,625

37,750

29,625

 

76,625

37,750

29,625

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2022 after Z’s retirement

Liabilities

Amount

(`)

Assets

Amount

(`)

Creditors

17,000

Cash at Bank (5,750 – 5,067)

683

Workmen Compensation Claim

750

Stock

30,000

Bills Payable

2,500

Patents

8,000

Capital A/c’s:

 

 

Debtors A/c

40,000

 

X

67,120

 

Less: Prov. for D/D

2,400

37,600

Y

31,413

98,533

Machinery

45,000

Z’s Loan

2,500

 

 

 

1,21,283

 

1,21,283

 

 


Working Note:

Amount due to Z = (21,000+3,480+2,320+1,875+1,000) - (1,000+133+875+17,600) =10,067

Amout paid on Retirement immediately: ` 5,067

Amount paid within one year: 50% of 5,000 = ` 2,500

Amount payable by Bills of Exchange: ` 2,500 (balance 50%)

 

Question 40:


Ashok, Bhaskar and Chaman were in partnership sharing profits and losses equally. ‘Chaman' retires from the firm. After adjustments, his Capital Account shows a credit balance of  ` 3,00,000 as on 1st April, 2019. Balance due to 'Chaman' is to be paid in three equal annual instalments along with interest @ 10% p.a. Prepare Chaman's Loan Account until he is paid the amount due to him. The firm closes its books on 31st March every year.

 

Answer:


Dr.

Chaman’s Loan A/c

Cr.

Date

Particulars

 (`)

Date

Particulars

 (`)

2020

 

 

2019

 

 

March 31

To Bank A/c

(1,00,000 + 30,000)

1,30,000

April 01

By Chaman’s Capital A/c

3,00,000

March 31

To balance c/d

2,00,000

2020

 

 

 

 

 

March 31

By Interest on Loan A/c

30,000

 

 

 

 

(3,00,000 × 10/100)

 

 

 

3,30,000

 

 

3,30,000

2021

 

 

2020

 

 

March 31

To Bank A/c (1,00,000 + 20,000)

1,20,000

April 01

By balance b/d

2,00,000

March 31

To balance c/d

1,00,000

2021

 

 

 

 

 

March 31

By Interest on Loan A/c

20,000

 

 

 

 

(2,00,000 × 10/100)

 

 

 

2,20,000

 

 

2,20,000

2023

 

 

2021

 

 

March 31

To Bank A/c (1,00,000 + 10,000)

1,10,000

April 01

By balance b/d

1,00,000

 

 

 

2023

 

 

 

 

 

March 31

By Interest on Loan A/c              

10,000

 

 

 

 

(1,00,000 × 10/100)

 

 

 

1,10,000

 

 

1,10,000

 

 

 

 

 

 

Working Notes:   Amount payable per Installment =  ` (3,00,000/3) =  ` 1,00,000

 

 

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