12th | Retirement of a partner  | Question No. 36 To 40 | Ts Grewal Solution 2024-2025

Ashok, Bhaskar and Chaman were in partnership sharing profits and losses equally. ‘Bhaskar' retires from the firm. After adjustments, his Capital Account shows a credit balance of  ` 3,00,000 as on 1st April, 2020. Balance due to Bhaskar' is to be paid in three equal annual instalments along with interest @ 10% p.a. Prepare Bhaskar's Loan Account until he is paid the amount due to him. The firm closes its books on 31st March every year.

 

Dr.	Bhaskar’s Loan A/c						Cr.
Date		Particulars	(`)	Date	Particulars	(`)
2021				2020
March 31		To Bank A/c (1,00,000 + 30,000)	1,30,000	April 01	By Bhaskar's Capital A/c	3,00,000
March 31		To balance c/d	2,00,000	2021
				March 31	By Interest on Loan A/c	30,000
					(3,00,000 × 10/100)
			3,30,000			3,30,000
2022				2021
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	2022
				March 31	By Interest on Loan A/c	20,000
					(2,00,000 × 10/100)
			2,20,000			2,20,000
2023				2022
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

 

 

Rakesh retired from the firm. The amount due to him was determined at  ` 90,000. It was decided to pay the due amount as follows:
On the date of retirement −  ` 30,000
Balance in three yearly instalments − First two instalments being of  ` 26,000, including interest; and Balance amount as last instalment.
Interest was payable @ 10% p.a. Prepare retiring Partners' Loan Account.

 

Dr.	Rakesh’s Loan A/c					Cr.
Date	Particulars	(`)	Date	Particulars	(`)
Year I	To Bank A/c (20,000 + 6,000)	26,000	Year I	By Y’s Capital A/c	60,000
	To balance c/d	40,000
				By Interest on Loan A/c	6,000
				(60,000 × 10/100)
		66,000			66,000
Year II	To Bank A/c (22,000 + 4,000)	26,000	Year II	By balance b/d	40,000
	To balance c/d	18,000
				By Interest on Loan A/c	4,000
				(40,000 × 10/100)
		44,000			44,000
Year III	To Bank A/c (18,000 + 1,800)	19,800	Year III	By balance b/d	18,000
				By Interest on Loan A/c	1,800
				(18,000 × 10/100)
		19,800			19,800

 

 

Date	Particulars		L.F.	Dr. `	Cr. `
	B’s capital a/c	Dr.		4,050
	To Revaluation a/c				4,050
	(Being unrecorded furniture taken over by partner B)
	Revaluation a/c	Dr.		9,000
	To unrecorded liabilities a/c				9,000
	(Being remaining unrecorded Liabilities  paid by partner)
	B’s capital a/c	Dr.		1,650
	To Revaluation a/c				1,650
	(Being loss on revaluation debited to B’s capital)
	B’s capital a/c	Dr.		1,74,300
	To Bank a/c				1,74,300
	(Being final amount paid to B’s capital on his retirement by bank draft)
	Total			1,89,000	1,89,000

 

Harish, Paresh and Mahesh were three partners sharing profits and losses in the ratio of 5 :4: 1. Paresh retired on 31st March, 2024. His capital as on 1st April, 2023, was 80,000. During the year 2023-24, he withdrew 5,000. He was to be charged interest of 100 on drawings.

The Partnership Deed provides that on the retirement of a partner, he will be entitled to:

(i) His share of capital.

(ii) Interest on capital @10% per annum.

(iii) His share of profit in the year of retirement.

(iv) His share of goodwill of the firm.

(v) His share in the profit/loss on revaluation of assets and liabilities.

Additional Information:

(a) Paresh's share in the profit of the firm for the year 2023-24 was 20,000.

(b) Goodwill of the firm was valued at 24,000.

(c) The firm incurred loss of 12,000 on the revaluation of assets and liabilities.

(d) Paresh was to be paid?7,700 in cash and the balance was to be transferred to his Loan Account bearing interest@ 6% per annum. Loan was to be repaid in two equal annual instalments, the first instalment to be paid on 31st March, 2025.

You are required to prepare:

(i) Paresh's Capital Account.

(ii) Paresh's Loan Account till it is finally closed.

 

Paresh’s Capital A/c
Particulars	`	Particulars	`
Revaluation A/c	4,800	Balance b/d	80,000
Drawings	5,000	Interest on Capital	8,000
Interest on Drawing	100	P&L Appropriation A/c	20,000
Paresh’s Loan A/c	1,00,000	Harish’s Capital A/c	8,000
		Mahesh’s Capital A/c	1,600
	1,17,600		1,17,600

 

Paresh’s Loan A/c
Date	Particulars	`	Date	Particulars	`
31-3-22	Balance C/d	1,00,000	31-3-22	Paresh’s Capital A/c	1,00,000
31-3-23	Bank A/c	56,000	1-4-22	Balance b/d	1,00,000
31-3-23	Balance C/d	50,000	31-3-23	Interest on Loan A/c	6,000
		1,06,000			1,06,000
31-3-24	Bank A/c	53,000	1-4-23	Balance b/d	50,000
			31-3-24	Interest on Loan A/c	3,000
		53,000			53,000

 

X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2009, Y retires from the firm. X and Z agree that the capital of the new firm shall be fixed at  ` 2,10,000 in the profit-sharing ratio. The Capital Accounts of X and Z after all adjustments on the date of retirement showed balance of  ` 1,45,000 and  ` 63,000 respectively. State the amount of actual cash to be brought in or to be paid to the partners. (AI 2020)

 

Old Ratio (X, Y, and Z) = 3 : 2 : 1

Y retires from the firm. 

∴New Ratio (X and Z) = 3 : 1 

Total capital of the New Firm = ` 2,10,000

X‘s new capital = 2,10,000×3/4=1,57,500

Z‘s new capital = 2,10,000×1/4=52,500

 

Ascertainment of Actual Cash to be brought in or to be paid to the partners

 

Particulars	X	Z
New Capital	1,57,500	52,500
Existing Capital	1,45,000	63,000
Cash Paid/Brought in	(12,500) (Brought in)	10,500 (Paid)