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12th | Retirement of a Partner | Question No.  46 To 50 | Ts Grewal Solution 2022-2023

Question 46:


Amit, Balan and Chander were partners in a firm sharing profits in the proportion of 1/2, 1/3 and 1/6 respectively. Chander retired on 1st April, 2014. The Balance Sheet of the firm on the date of Chander's retirement was as follows:
 

Liabilities

 ( `)

Assets

 ( `)

Sundry Creditors

12,600

 Bank

4,100

Provident Fund

3,000

 Debtors

30,000

 

General Reserve

9,000

 Less: Provision 

1,000

29,000

Capital A/cs:

 

 

 

 

Amit

40,000

 

Stock

25,000

Balan

36,500

 

Investments

10,000

Chander

20,000

96,500

Patents

5,000

 

 

 

Machinery

48,000

 

1,21,100

 

1,21,100

 

 

 

 

 
It was agreed that:
(i)  Goodwill will  be valued at 
` 27,000.
(ii) Depreciation of 10% was to be provided on Machinery.
(iii) Patents were to be reduced by 20%. 
(iv) Liability on account of Provident Fund was estimated at  ` 2,400.
(v) Chander took over Investments for  ` 15,800.
(vi) Amit and Balan decided to adjust their capitals in proportion of their profit-sharing ratio by opening Current Accounts.
Prepare Revaluation Account and Partners' Capital Accounts on Chander's retirement. 

 

Answer:


Revaluation Account

Dr.

 

Cr.

Particulars

`

Particulars

`

Machinery

4,800

Investments A/c

5,800

Patents

1,000

Provident Fund A/c

600

Profit transferred to:

 

 

 

Amit’s Capital A/c

300

 

 

 

Balan’s Capital A/c

200

 

 

 

Chander’s Capital A/c

100

600

 

 

 

6,400

 

6,400

 

 

 

 

 

 

 

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

Amit

Balan

Chander

Particulars

Amit

Balan

Chander

Investments A/c

 

 

15,800

Balance b/d

40,000

36,500

20,000

Chander’s Capital A/c

2,700

1,800

 

Revaluation A/c (Profit)

300

200

100

Loan A/c

 

 

10,300

General Reserve

4,500

3,000

1,500

Current A/c

 

5,900

 

Amit’s Capital A/c

 

 

2,700

Balance c/d

48,000

32,000

 

Balan’s Capital A/c

 

 

1,800

 

 

 

 

Current A/c

5,900

 

 

 

50,700

39,700

26,100

 

50,700

39,700

26,100

 

 

 

 

 

 

 

 

 

Working Notes:

WN1: Adjustment of Goodwill

Chander’s share of Goodwill =27,000 ×1/6=4,500

Amit wil pay=4,500×3/5=2,700

Balan wil pay=4,500×2/5=1,800

 

WN2 Adjustment of Capital
Adjusted Old Capital of Amit=44,800 (40,000+4,500+300)-2,700=
` 42,100

Adjusted Old Capital of Balan=39,700 (36,500+3,000+200)-1,800=` 37,900

Total Adjusted Capital=42,100+37,900=` 80,000

New Profit Sharing Ratio=3:2

Amit's New Capital=80,000×3/5=` 48,000

Balan's New Capital=80,000×2/5=` 32,000


Note: Since, here no information is given regarding the share acquired by Amit and Balan, therefore, their gaining ratio is same as their new profit sharing ratio i.e. 3 : 2.

  

Question 47:


N, S and B are partners in a firm sharing profits and losses in the proportion of 1/2 : 1/6 : 1/3 respectively. The Balance Sheet of the firm as at On 31st March, 2017,was as follow:
 

BALANCE SHEET OF N,S AND B as at 31st march, 2017

Liabilities

 ( `)

Assets

 ( `)

Bills Payable

12,000

Freehold Premises

40,000

Sundry Creditors

18,000

Machinery

30,000

General Reserve

12,000

Furniture

12,000

Capital A/cs:

 

Stock

22,000

  N

30,000

 

Sundry Debtors

20,000

 

  S

30,000

 

  Less: Provision for Doubtful Debts

1,000

19,000

  B

28,000

88,000

Cash

7,000

 

 

 

 

 

 

1,30,000

 

1,30,000

 

 

 

 

 
B retired from the business on the above date and the partners agree to the following:
(a) Freehold Premises and Stock are to be appreciated by 20% and 15% respectively.
(b) Machinery and Furniture are to be reduced by 10% and 7% respectively.
(c) Provision for Doubtful Debts is to be increased to 
` 1,500.
(d) Goodwill of the firm is valued at 
` 21,000 on B's retirement.
(e) Continuing partners to adjust their capitals in their new profit-sharing ratio after retirement of B. Surplus/deficit, if any, in their Capital Accounts will be adjusted through Current Accounts.
Prepare necessary Ledger Accounts and draw the Balance Sheet of the reconstituted firm.

 

Answer:


Revaluation Account

Dr.

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Machinery (30,000 × 10%)

Furniture (12,000 × 7%)

3,000

840

Freehold Premises (40,000 × 20%)

8,000

Provision for Doubtful Debts

1,500

Stock (22,000 × 15%)

3,300

 

 

Profit transferred to:

 

 

 

N’s Capital A/c

2,980

 

 

 

S’s Capital A/c

993

 

 

 

B’s Capital A/c

1,987

6,960

 

 

 

11,300

 

11,300

 

 

 

 

 

Partner’s Capital Accounts

Dr.

 

Cr.

Particulars

N

S

B

Particulars

N

S

B

B’s Capital A/c

5,250

1,750

-

Balance b/d

30,000

30,000

28,000

B’s Loan A/c

-

-

40,987

General Reserve

6,000

2,000

4,000

Balance c/d

33,730

31,243

40,987

N’s Capital A/c (Goodwill)

-

-

5,250

 

 

 

 

B’s Capital A/c (Goodwill)

-

-

1,750

 

Revaluation A/c (Profit)

2,980

993

1,987

 

38,980

32,993

40,987

 

38,980

32,993

40,987

Y’s Current A/c

-

7,500

-

Balance b/d

33,730

31,243

-

Balance c/d

48,730

16,243

-

X’s Current A/c

15,000

-

-

 

48,730

31,243

-

 

48,730

31,243

-

 

 

 

 

 

 

 

 

 

Balance Sheet
as on 1st April, 2017

Liabilities

 ( `)

Assets

 ( `)

Bills Payable

12,000

Freehold Premises (40,000 + 8,000)

48,000

Sundry Creditors

18,000

Machinery (30,000 – 3,000)

27,000

B’s Loan

40,987

Furniture (12,000 – 840)

11,160

Capital A/cs:

 

Stock (22,000 + 3,300)

25,300

N

48,730

 

Sundry Debtors

20,000

 

S

16,243

64,973

Less: Provision for Doubtful Debts

 

(2,500)

 

18,500

S’s Current A/c

15,000

Cash

7,000

 

 

N’s Current A/c

15,000

 

1,50,960

 

1,50,960

 

 

 

 


Working Notes

WN 1 Calculation of Profit Sharing Ratio
Old Ratio (N, S and B) = 3 : 1 : 2
B retires from the firm.
New Ratio (N and S) = 3 : 1 and
Gaining Ratio = 3 : 1

WN 2 Adjustment of Goodwill
Goodwill of the firm =
` 21,000
B’s Share of Goodwill =
= 21,000×2/6=7,000

 

This share of goodwill is to be distributed between N and S in their gaining ratio (i.e. 3 : 1).
N‘s share
= 7,000×3/4=5,250

S‘s share= 7,000×1/4=1,750

 

Condition for goodwill treatment; gaining partner to retiring partner

N’s capital a/c

Dr.

      5,250

-

S’s Capital a/c

Dr.               

1,750

-

   To B’s Capital a/c                                  

 

-

7,000

 

WN 3 Adjustment of Partners’ Capital after B’s Retirement
Combined Capital of N and S after all adjustments = 33,730 + 31243 =
`. 64,973

New Ratio = 3 : 1

N‘s new capital
= 64,973×3/4=48,730

S‘s new capital = 64,973×1/4=16,243

 

Question 48: Leena, Madan and Naresh were partners in a firm sharing profits and losses in the ratio of 2:2 :3. On 31st March, 2015, their Balance Sheet was as follows:


BALANCE SHEET as at 31st March, 2015

Liabilities

 

`

Assets

`

Trade Creditors

 

1,60,000

Land and Building

10,00,000

Bank Overdraft

 

44,000

Machinery

5,00,000

Long-term Debts

 

4,00,000

Furniture

7,00,000

Employees' Provident Fund

 

76,000

Investments

2,00,000

Capitals:

 

 

Closing Stock

8,00,000

Leena

12,50,000

 

 

 

Madan

8,00,000

 

Sundry Debtors

4,00,000

Naresh

10,50,000

31,00,000

Bank

80,000

 

 

 

Deferred Advertisement Expenditure

1,00,000

 

 

37,80,000

 

37,80,000

On 31st March, 2015, Madan retired from the firm and the remaining partners decided to carry on the

business. It was decided to revalue assets and liabilities as under:

(i) Land and Building be appreciated by `2,40,000 and Machinery be depreciated by 10%.

(ii) 50% of Investments were taken over by the retiring partner at book value.

(iii) An old customer Mohit whose account was written off as bad debt had promised to pay `7,000 in settlement of his full debt of `10,000.

(iv) Provision for Doubtful Debts was to be made at 5% on debtors.

(v) Closing Stock will be valued at market price which is `1,00,000 less than the book value.

(vi) Goodwill of the firm be valued at `5,60,000 and Madan's share of goodwill be adjusted in the accounts of Leena and Naresh. Leena and Naresh decided to share future profits and losses in the ratio of 3:2.

(vii) The total capital of the new firm will be `32,00,000 which will be in the proportion of the profit sharing ratio of Leena and Naresh.

(vii) Amount due to Madan was settled by accepting a Bill of Exchange in his favour payable after 4 months.

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

(AI 2016 C)

Answer:


Revaluation Account

Dr.

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Machinery

Provision for D.D.

Capital – profit transferred to;

Leena = 70,000×2/7=20,000

Madan = 70,000×2/7=20,000

Naresh = 70,000×3/7=30,000

50,000

1,00,000

 

 

 

70,000

Land and building  

2,40,000

2,40,000

2,40,000

 

 

 

 

 

Partner’s Capital Accounts

Dr.

 

Cr.

Particulars

Leena

Madan

Naresh

Particulars

Leena

Madan

Naresh

To Madan’s capital a/c

To Naresh’s capital a/c

To Def. Adv. exp. A/c

1,60,000

16,000

28,571

 

 

28,571

 

 

42,858

By Balance b/d

By Leena’s capital a/c

By Revaluation a/c

12,50,000

 

20,000

8,00,000

160,000

20,000

10,50,000

16,000

30,000

To Investment a/c

1,00,000

To bills payables a/c

8,51,429

To Balance C/d

10,65,429

10,53,142

12,70,000

9,80,000

10,96,000

12,70,000

9,80,000

10,96,000

To Balance C/d

19,20,000

12,80,000

By Balance b/d

By Cash a/c

10,65,429

8,54,571

10,53,142

2,26,858

19,20,000

12,80,000

19,20,000

12,80,000

 

 

 

 

 

 

 

 

 

Balance Sheet
as on 1st April, 2015

Liabilities

 ( `)

Assets

 ( `)

Trade creditors

Bank overdraft

Long-term Debts

Employees provident fund

160,000

44,000

4,00,000

76,000

Land and building

Machinery

Furniture

Investment

Closing Stock

12,40,000

4,50,000

7,00,000

1,00,000

7,00,000

Capital

Leena = 1920,000

Naresh= 12,80,000

 

 

32,00,000

Debtors                                  4,00,000

Less; prov. For D.D.                20,000

Cash (80,000+8,54,571+2,26,858)

 

3,80,000

11,61,429

Bills payables

8,51,429

47,31,429

47,31,429

 

 

 

 


Working Notes

WN 1 Calculation of Profit Sharing Ratio

Old Ratio (Leena , Madan and Naresh) = 2 : 2 : 3
New Ratio (Leena and Naresh) = 3 : 2 and

Madan retires from the firm.

Gaining ratio= new ratio- old ratio

Leena’s = 3/5-2/7=21-10/35=11/35 (gain)
Naresh’s =2/5- 3/7=14-15/35= -1/35 (Sacrifice)

WN 2 Adjustment of Goodwill

Goodwill of the firm =
` 5,60,000

Madan will be compensated =5,60,000×2/7=1,60,000

Naresh will be compensated =5,60,000×1/35=16,000

Leena will compensate =5,60,000×11/35=1,76,000

 

Condition for goodwill treatment; gaining partner to retiring partner

Leena’s capital a/c            Dr.                176,000

   To Madan’s Capital a/c                                   1,60,000

   To Naresh’s Capital a/c                                      16,000


WN 3 Adjustment of Partners’ Capital after Madan’s Retirement

leena’s capital= 32,00,000×3/5=19,20,000

Naresh’s capital= 32,00,000×2/5=12,80,000

 

Question 49:


Following is the Balance Sheet of Kusum, Sneh and Usha as on 31st March, 2022, who have agreed to share profits and losses in proportion of their capitals:

 

 

Liabilities

 `

Assets

 `

Capital A/cs:

 

Land and Building

 4,00,000

Kusum

4,00,000

 

Machinery

6,00,000

Sneh

6,00,000

 

Closing Stock

2,00,000

Usha

4,00,000

14,00,000

Sundry Debtors

2,20,000

 

Employees' Provident Fund

70,000

Less: Provision for Doubtful Debts

20,000

 

Workmen Compensation Reserve            

30,000

Cash at Bank

 

2,00,000

Sundry Creditors

1,00,000

 

 

 2,00,000

 

 

 

 

 

 

16,00,000

 

 16,00,000

 

 

 

 

On 1st April, 2022, Kusum retired from the firm and the remaining partners decided to carry on the business. It was agreed to revalue the assets and reassess the liabilities on that date, on the following basis:
(a) Land and Building be appreciated by 30%.
(b) Machinery be depreciated by 30%.
(c) There were Bad Debts of  ` 35,000.
(d) The claim against Workmen Compensation Reserve was estimated at  ` 15,000.
(e) Goodwill of the firm was valued at 
` 2,80,000 and Kusum's share of goodwill was adjusted against the Capital Accounts of the continuing partners Sneh and Usha who have decided to share future profits in the ratio of 3 : 4 respectively.
(f) Capital of the new firm in total will be the same as before the retirement of Kusum and will be in the new profit-sharing ratio of the continuing partners.
(g) Amount due to Kusum be settled by paying  ` 1,00,000 in cash and balance by transferring to her Loan Account which will be paid later on.
Prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet of the new firm after Kusum's retirement.

 

Answer:


Revaluation Account

Dr.

Cr.

Particulars

 ( `)

Particulars

 ( `)

Machinery A/c

1,80,000

Land and Building A/c

1,20,000

Bad Debts A/c

(35,000 – 20,000)

15,000

Loss on Revaluation transferred to:

 

 

 

Kusum

21,429

 

 

 

Sneh

32,142

 

 

 

Usha

21,429

75,000

 

1,95,000

 

1,95,000

 

 

 

 

 


Partners’ Capital Account

Dr.

Cr.

Particulars

Kusum

Sneh

Usha

Particulars

Kusum

Sneh

Usha

Revaluation A/c (Loss)

21,429

32,142

21,429

Balance b/d

4,00,000

6,00,000

4,00,000

Usha’s Capital A/c

80,000

Workmen Compensation Fund

4,286

6,428

4,286

Bank A/c

1,00,000

Usha’s Capital A/c

80,000

Kusum’s Loan A/c

3,62,857

 

 

 

 

Balance c/d

5,74,286

3,02,857

 

 

 

 

 

4,84,286

6,06,428

4,04,286

 

4,84,286

6,06,428

4,04,286

Balance c/d

6,00,000

8,00,000

Balance b/d

5,74,286

3,02,857

 

 

 

 

Bank A/c (WN3)

25,714

4,97,143

 

6,00,000

8,00,000

 

6,00,000

8,00,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as at March 31, 2022

Liabilities

 ( `)

Assets

 ( `)

Creditors

1,00,000

Land & Building

5,20,000

Employee’s Provident Fund

70,000

Machinery (6,00,000 – 1,80,000)

4,20,000

Workmen’s Compensation Claim

15,000

Stock

2,00,000

Kusum’s Loan

3,62,857

Sundry Debtors (2,20,000 – 35,000)

1,85,000

Capital A/c :

 

Bank

6,22,857

Sneh

6,00,000

 

 

 

Usha

8,00,000

14,00,000

 

 

 

19,47,857

 

19,47,857

 

 

 

 

 

Working Notes

 

WN 1 Calculation of Gaining Ratio 


Old Ratio (Kusum, Sneh and Usha) = 2:3:2

New Ratio (Sneh and Usha) = 3:4

Gaining Ratio = New Ratio – Old Ratio

Sneh‘s share= 3/7-3/7=nil

Usha‘s share= 4/7-2/7=2/7


WN2 Adjustment of Goodwill


Total Goodwill of the Firm = 2,80,000

Kusum’s Share of Goodwill = 2,80,000×2/7=80,000

It is to be adjusted by the Gaining partners i.e. only by Usha

 

WN3 Adjustment of Capital

Tatal capital of the firm before kusum’s retirement =14,00,000

New Ratio (Sneh and Usha) = 3:4

Sneha‘s new captial= 14,00,000×3/7=6,00,000


Usha‘s
new capital= 14,00,000×4/7=8,00,000

 

Particulars

Sneh

Usha

New Capital Balance

6,00,000

8,00,000

Adjusted Old Capital Balance

5,74,286

3,02,857

Cash brought in by the Partner

25,714

4,97,143

 

 

 

 

WN4

Cash at Bank A/c

Dr.

Cr.

Particulars

 ( `)

Particulars

 ( `)

Balance b/d

2,00,000

Kusum’s Capital A/c

1,00,000

Sneh’s Capital A/c

25,714

Balance c/d

6,22,857

Usha’s Capital A/c

4,97,143

 

 

 

7,22,857

 

7,22,857

 

 

 

 

 

Question 50:


Lal, Bal and Pal are partners sharing profits in the ratio of 5 : 3 : 7. Lal retired from the firm. Bal and Pal decided to share future profits in the ratio of 2 : 3. The adjusted Capital Accounts of Bal and Pal showed balance of ` 49,500 and ` 1,05,750 respectively. The total amount to be paid to X is  ` 1,35,750. This amount is to be paid by Bal and Pal in a manner that their capitals become proportionate to their new profit-sharing ratio. Calculate the amount to be brought in or to be paid to partners. 

 

Answer:


New Capital = 49,500 + 1,05,750 + 1,35,750 = ` 2,91,000

Bal's New Capital=2,91,000×2/5=1,16,400

Pal's New Capital=2,91,000×3/5=1,74,600

Bal brings in
` 66,900 (1,16,400 – 49,500)

Pal brings in
` 68,850 (1,74,600 – 1,05,750)

Ts Grewal Solution 2022-2023

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Class 12 / Volume – I

Chapter 1 – Retirement of a Parnter

 

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 59

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