commercemine.com

12th | Retirement of a Partner | Question No.  51 To 55 | Ts Grewal Solution 2022-2023

Question 51:


Balance Sheet of X, Y and Z who shared profits in the ratio of 5 : 3 : 2, as on 31st March, 2022 was as follows:

 

 

Liabilities

 `

Assets

 `

Sundry Creditors

39,750

Bank (Minimum Balance)

15,000

Employees' Provident Fund

5,250

Debtors

97,500

Workmen Compensation Reserve

22,500

Stock

82,500

Capital A/cs:

 

Fixed Assets

1,87,500

X 

1,65,000

 

 

 

Y

84,000

 

 

 

Z

66,000

3,15,000

 

 

 

3,82,500

 

3,82,500

 

 

 

 

 

    
Y retired on 1st April, 2022 and it was agreed that:
(i) Goodwill of the firm is valued at 
` 1,12,500 and Y's share of it be adjusted into the accounts ofand Z who are going to share future profits in the ratio of 3 : 2.
(ii) Fixed Assets be appreciated by 20%.
(iii) Stock be reduced to  ` 75,000.
(iv) Y be paid amount brought in by X and Z so as to make their capitals proportionate to their new profit-sharing ratio.
Prepare Revaluation Account, Capital Accounts of all partners and the Balance Sheet of the New Firm.

Answer:


Revaluation Account

Dr.

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Stock

7,500

Fixed Assets

37,500

Revaluation Profit

 

 

 

X’s Capital A/c

15,000

 

 

 

Y’s Capital A/c

9,000

 

 

 

Z’s Capital A/c

6,000

30,000

 

 

 

 

 

 

 

37,500

 

37,500

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

11,250

-

22,500

Balance b/d

1,65,000

84,000

66,000

Bank

-

1,33,500

-

General Reserve

11,250

6,750

4500

Balance c/d

2,20,500

-

1,47,000

Revaluation (Profit)

15,000

9,000

6,000

 

 

 

 

X’s Capital A/c

-

11,250

-

 

 

 

 

Z’s Capital A/c

-

22,500

-

 

 

 

 

Bank A/c

40,500

-

93,000

 

2,31,750

1,33,500

1,69,500

 

2,31,750

1,33,500

1,69,500

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2022

Liabilities

 ( `)

Assets

 ( `)

Sundry Creditors

39,750

Bank

15,000

Employees Provident Fund

5,250

Debtors

97,500

Capitals:

 

Stock

75,000

 X

2,20,500

 

Fixed Assets

2,25,000

 Z

1,47,000

72,000

 

 

 

4,12,500

 

4,12,500

 

 

 

 


Working Notes:
New Capital = 1,80,000 + 54,000 + 1,33,500 =
` 3,67,500

X's New Capital=3,67,500×3/5=2,20,500

Z's New Capital=3,67,500×2/5=1,47,500

X brings in
` 40,500 (2,20,500 – 1,80,000)

Z brings in
` ` 93,000 (1,47,500 – 54,000)

 

Question 52:


Sushil, Satish and Samir are partners sharing profits in the ratio of 5 : 3 : 2. Satish retires on 1st April, 2022 from the firm, on which date capitals of Sushil, Satish and Samir after all adjustments are  ` 1,03,680,  ` 87,840 and  ` 26,880 respectively. The Cash and Bank Balance on that date was  ` 9,600. Satish is to be paid through amount brought in by Sushil and Samir in such a way as to make their capitals proportionate to their new profit-sharing ratio which will be Sushil 3/5 and Samir 2/5. Calculate the amount to be paid or to be brought in by the continuing partners assuming that a minimum Cash and Bank balance of  ` 7,200 was to be maintained and pass the necessary Journal entries.

 

Answer:


Total capital of firm before retirement = 1,03,680+87,840+26,880 = ` 2,18,400

Availability of cash = 9,600-7,200 (Minimum Balance) = ` 2,400

Combined new capital of Sushil and Samir =` 2,16,000

Sushil's new capital = 2,16,000×3/5=` 1,29,600

Existing capital of Sushil= ` 1,03,680

So, Sushil has to bring = 1,29,600−1,03,680= ` 25,920

Samir's new capital = 2,16,000×2/5=` 86,400

Existing capital of Samir = ` 26,880

So, Samir has to bring = 86,400−26,880=` 59,520  

 

Question 53:


A, B and C are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Their Balance Sheet as at 31st March, 2022 is:
 

Liabilities

 ( `)

Assets

 ( `)

Creditors

30,000

Cash in Hand

18,000

Bills Payable

16,000

Debtors

25,000

 

General Reserve

12,000

Less: Provision for Doubtful Debts

3,000

22,000

Capital A/cs:

 

Stock

 

18,000

 A

40,000

 

Furniture

30,000

 B

40,000

 

Machinery

70,000

 C

30,000

1,10,000

Goodwill

10,000

 

 

 

 

 

 

1,68,000

 

1,68,000

 

 

 

 


B retires on 1st April, 2022 on the following terms:
(a) Provision for Doubtful Debts be raised by 
` 1,000.
(b) Stock to be reduced by 10% and Furniture by 5%.
(c) There is an outstanding claim of damages of 
` 1,100 and it is to be provided for.
(d) Creditors will be written back by 
` 6,000.
(e) Goodwill of the firm is valued at 
` 22,000.
(f) B is paid in full with the cash brought in by A and C in such a manner that their capitals are in proportion to their profit-sharing ratio and Cash in Hand remains at 
` 10,000.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of A and C.

 

Answer:


Revaluation Account

Dr.

Cr.

Particulars

 ( `)

Particulars

 ( `)

Provision for doubtful debts

1,000

Creditors

6,000

Stock

Furniture

1,800

1,500

Outstanding claim of damage

Capital a/c;

A=600×3/6=300

B=600×2/6=200

C=600×1/6=100

1,100 

 

 

 

 

600

 

 

 

6,000

 

6,000

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

Kusum

Sneh

Usha

Particulars

Kusum

Sneh

Usha

B’s Capital A/c

5,500

1,833

Balance b/d

40,000

40,000

30,000

Goodwill a/c

5,000

3,333

1,667

A’s capital a/c

4,286

5,500

4,286

Cash A/c

48,200

C’s Capital A/c

80,000

1,833

Balance c/d

35,800

28,600

 Revaluation a/c

300 

200 

100 

General Reserve

6,000 

4,000 

2,000 

 

46,300

51,533

32,100

 

46,300

51,533

32,100

Cash A/c

2,450

Balance b/d

35,800

28,600

 Balance c/d

78,450 

 

26,150 

Cash A/c

42,650

 

78,450 

28,600

 

78,450 

28,600

 

 

 

 

 

 

 

 

 

Balance Sheet

as at March 31, 2022

Liabilities

 ( `)

Assets

 ( `)

Creditors

24,000

Cash in hand

10,000

Bills payables

16,000

Debtors          25,000

Outstanding claim of damage

1,100

Less; prov.       4,000

Stock

21,000

16,000

Capital A/c :

 

Furniture

28,500

A

78,450 

 

Machinery

70,000

C

26,150 

1,04,600

 

 

 

1,45,700

 

1,45,700

 

 

 

 

 

Working Notes

 

WN 1 Calculation of New and Gaining Ratio 


Old Ratio (A,B and C) = 3:2:1 
New Ratio (A, C) = 3:1                                                  
Gaining Ratio = New Ratio – Old Ratio
A‘s share= 3/4-3/6=18-12/24=6/24

C‘s share= 1/4-1/6=6-4/24=2/24

Therefore gaining Ratio (A, C) = 3:1 


WN2 Adjustment of Goodwill


Total Goodwill of the Firm = 22,000
B’s Share of Goodwill = 22,000×2/6  =7,333

A will compensate =7,333×3/4=5,500

C will compensate =7,333×1/4=1,833

WN3 Adjustment of Capital

Total capital of the firm =35,800+48,200+28,600-(18,000-10,000)=1,04,600

A‘s new capital= 1,04,600×3/4=78,450
C‘s new capital
= 1,04,600×1/4=26,150       

 

WN4

Closing bank balance =18,000+42,650-48,200-2,450=10,000

 

Question 54:


The Balance Sheet of Asha, Deepa and Leta who were sharing profits in the ratio of 5 : 3 : 2 as at 31st March, 2022 is as follows:

 

 

Liabilities

 `

Assets

 `

Creditors

50,000

Cash at Bank

40,000

Employees' Provident Fund

10,000

Sundry Debtors

1,00,000

Profit and Loss A/c

85,000

Stock

80,000

Capital A/cs:

 

Fixed Assets

60,000

Asha

40,000

 

 

 

Deepa

62,000

 

 

 

Leta

33,000

1,35,000

 

 

 

2,80,000

 

2,80,000

 

 

 

 

 

Asha retired on 1st April, 2022 and Deepa and Leta decided to share profits in future in the ratio of 3 : 2 respectively.
The other terms on retirement were:
(a) Goodwill of the firm is to be valued at 
` 80,000.
(b) Fixed Assets are to be depreciated to  ` 57,500.
(c) Make a Provision for Doubtful Debts at 5% on Debtors.
(d) A liability for claim, included in Creditors for  ` 10,000, is settled at 
` 8,000.
The amount to be paid to Asha by
Deepa and Leta in such a way that their Capitals are proportionate to their profit-sharing ratio and leave a balance of  ` 15,000 in the Bank Account.
Prepare Profit and Loss Adjustment Account and Partners' Capital Accounts.

 

Answer:


Revaluation Account

Dr.

Cr.

Particulars

 ( `)

Particulars

 ( `)

Fixed Assets A/c

(60,000 – 57,500)

2,500

Creditors (10,000 – 8,000)

2,000

Provision for Doubtful Debts

5,000

Loss on Revaluation transferred to:

 

 

 

Asha’s Capital a/c

2,750

 

 

 

Deepa’s Capital a/c

1,650

 

 

 

Leta’s Capital a/c

1,100

5,500

 

7,500

 

7,500

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Asha

Deepa

Leta

Particulars

Asha

Deepa

Leta

 

Revaluation A/c (Loss)

2,750

1,650

1,100

Balance b/d

40,000

62,000

33,000

 

Asha’s Capital A/c

24,000

16,000

Profit & Loss A/c

42,500

25,500

17,000

 

Balance c/d

1,19,750

61,850

32,900

Deepa’s Capital A/c

24,000

 

 

 

 

 

Leta’s Capital A/c

16,000

 

 

1,22,500

87,500

50,000

 

1,22,500

87,500

50,000

 

Bank A/c

1,19,750

Balance b/d

1,19,750

61,850

32,900

 

Balance c/d

1,18,500

79,000

Bank A/c

56,650

46,100

 

 

1,19,750

1,18,500

79,000

 

1,19,750

1,18,500

79,000

 

 

 

 

 

 

 

 

 

 

 

Working Notes

 WN 1 Calculation of Gaining Ratio 

Old Ratio (Asha, Deepa and Leta) = 5:3:2

New Ratio (Deepa and Leta) = 3:2

Gaining Ratio = New Ratio – Old Ratio

Deepa’s

=3/5-3/10

 

=3/10

Leta’s

=2/5-2/10

 

=2/10

Hence, gaining ratio is 3: 2.

 

WN2 Adjustment of Goodwill

Total Goodwill of the Firm = 80,000

Asha’s Share of Goodwill = 80,000×5/10=40,000

To be borne by Gaining partners in their Gaining Ratio i.e. 3:2
Deepa’s Share = 40,000×3/5=24,000
Leta’s Share = 40,000×2/5=16,000

WN3 Adjustment of Capital

Asha’s Capital before adjustment = 1,19,750

Deepa’s Capital before adjustment = 61,850

Leta’s Capital before adjustment = 32,900

Total Capital of New Firm= Asha's Capital+Deepa's Capital+Leta's Capital+Closing balance of Bank Account-Available Bank Balance=1,19,750+61,850+32,900+15,000-32,000=
`1,97,500

New profit sharing ratio=3:2

Deepa’s Share of Goodwill =1,97,500×3/5=1,18,500

Leta’s Share of Goodwill =1,97,500×2/5=79,000
 

Particulars

Deepa

Leta

 New Capital Balance

1,18,500

79,000

 Adjusted Old Capital Balance

61,850

32,900

Cash brought in by the Partner

56,650

46,100

 

 

 

WN4

Cash at Bank A/c

Dr.

Cr.

Particulars

 ( `)

Particulars

 ( `)

Balance b/d

40,000

Creditors

8,000

Deepa’s Capital A/c

56,650

Asha’s Capital A/c

1,19,750

Leta’s Capital A/c

46,100

Balance c/d

15,000

 

1,42,750

 

1,42,750

 

 

 

 

 

Question 55:


Amrit, Bhanu and Charu were partners in a firm sharing profits equally. Bhanu retired on 30th September, 2021. Profit till the date of retirement was to be estimated based on last year's profit. Profit for the year ended 31st March, 2021, was ` 3,60,000.

Calculate Bhanu's share of profit till his retirement and pass Journal entry/entries for the same when:

(i) The profit-sharing ratio between Amrit and Charu does not change; and

(ii) The new profit-sharing ratio between Amrit and Charu changes to 3:2.

Answer:


Date

Particulars

 

`

`

(Case)

Profit and Loss Suspense A/c

Dr.

60,000

 

1.

 To Bhanu’s Capital A/c

 

 

60,000

 

(Bhanu was compensated for his share of goodwill ) (W.N. – 1)

 

 

 

(Case)

Amrit’s Capital A/c

Dr.

48,000

 

2.

Charu’s Capital A/c

Dr.

12,000

 

 

 To Bhanu’s Capital A/c

 

 

60,000

 

(Bhanu was compensated for his share of goodwill) (W.N. – 2)

 

 

 

 

Working notes:

 

W.N. – 1 ((i) The profit-sharing ratio between Amrit and Charu does not change)

Profit sharing ratio of Amrit, Bhanu and Charu was 1:1:1

Profit for the year ended 31st March, 2021, was ` 3,60,000

Bhanu's share of profit=3,60,000×1×6/3×12=60,000

 

W.N.-2 ((ii) The new profit-sharing ratio between Amrit and Charu changes to 3:2)

A= 1/3-3/5=5-9/15= -4/15 (Gain)

B=  1/3-2/5=5-6/15= -1/15 (Gain)

Share of A and B in 4:1

A=  60,000×4/5=48,000

A=  60,000×1/5=12,000

 

Ts Grewal Solution 2022-2023

Click below for more Questions

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

Click on below links for 

12th TS Grewal’s Accountancy Solutions

Ts Grewal Solution 2022-2023

Ts Grewal Solution 2021-2022

Ts Grewal Solution 2020-2021