12th | Retirement of a partner  | Question No. 16 To 20 | Ts Grewal Solution 2024-2025

Calculate gain/sacrifice of Bimal and Deepak on Aman's retirement and also pass necessary Journal entry for the treatment of goodwill. (CBSE 2019)

 

Journal
Date	Particulars		L.F.	Debit  (`)	Credit  (`)
	Bimal’s capital a/c	Dr.		7,500
	To Amal’s capital a/c				7,500
	(Being Goodwill adjusted)

 

Working notes;

WN1-

Calculation of gaining and sacrificing ratio

	Amal	Bimal	Deepak
Old ratio	2                   :	3                :	5
New ratio	Retires	1                :	1

Bimal = 3/10-1/2=3-5/10= -2/10

Deepak =5/10-1/2=5-5/10= 0/10

Gaining ratio of Sunil and David=13:11

 

WN2-

Firms goodwill =37,500

Share of retiring partner Amal is 2/10

Share of Amal share =37,500×2/10=7,500

Bimal will compensate 7,500

 

Hidden Goodwill

 

A, B and C are partners sharing profits in the ratio of 4/9 : 3/9 : 2/9. B retires and his capital after making adjustments for reserves and gain (profit) on revaluation stands at  ` 1,39,200. A and C agreed to pay him  ` 1,50,000 in full settlement of his claim. Record necessary Journal entry for adjustment of goodwill if the new profit-sharing ratio is decided at 5 : 3.

 

Journal
Date	Particulars		L.F.	Debit `	Credit `
	A’s Capital A/c	Dr.		5,850
	C’s Capital A/c	Dr.		4,950
	To B’s Capital A/c				10,800
	(Being Adjustment of B’s share of goodwill)

Working Notes
i. Calculation of B’s share of goodwill
A, B and C are sharing profits in ratio 4/9 : 3/9 : 2/9
B retires from the firm. Remaining partners agreed to pay him ` 1,50,000
B’s capital after making necessary adjustments ` 1,39,200
Therefore, Hidden Goodwill is ` (1,50,000 – 1,39,200) i.e. ` 10,800

ii Gaining Ratio
New profit sharing ratio between A and B is 5:3
A's Gain=5/8-5/9=13/72

C's Gain=3/8-2/9=11/72
Gaining ratio 13:11

Thus, B’s share of goodwill will be brought in by A and C in the gaining ratio 13:11 i.e.

A’s capital will be debited =10,800×13/24=5850

C’s capital will be debited =10,800×11/24=4950

 

Date	Particulars		`	`
1.	Shivam’s Capital A/c	Dr.	42,000
	Deepak’s Capital A/c	Dr.	28,000
	To Kapil’s Capital A/c			70,000
	(Kapil was compensated for his share of goodwill )
2.	Kapil’s Capital A/c	Dr.	4,20,000
	To Computer A/c			4,20,000
	(Computer was paid in consideration of Capital)

Working notes:

Kapil’s capital (after adjustments of reserve and profit on revaluation)	=	` 3,50,000
Less: Shivam and Deepak paid him capital in settlement of his claim	=	` 4,20,000
Hidden Goodwill (Share of Kapil in Goodwill)	=	` 70,000

Shivam and Deepak Pay in 3:2

Shivam  = 70,000 × 3/5= 42,000

Deepak = 70,000 × 2/5= 28,000

 

M, N and O are partners in a firm sharing profits in the ratio of 3 : 2 : 1. Goodwill has been valued at ` 60,000. On N's retirement, M and O agree to share profits equally. Pass the necessary Journal entry for treatment of N's share of goodwill.

 

Journal
Date	Particulars		L.F.	Debit  (`)	Credit  (`)
	O’s Capital A/c	Dr.		20,000
	To N’s Capital A/c				20,000
	(Being Adjustment of N’s share of goodwill)

 

Working Notes:

WN1:Calculation of Gaining Ratio

M :N :O=3:2:1(Old ratio)

M :O =1:1(New ratio)

Gaining Ratio = New Ratio - Old Ratio

M's Gain =1/2−3/6=3−3/6=0

O's Gain=1/2−1/6=3−1/6=2/6

WN2: Calculation of Retiring Partner’s Share of Goodwill

N's share of goodwill=60,000×2/6=` 20,000

N's share of goodwill will be brought by O only.

Therefore, O's Capital A/c will be debited with ` 20,000

 

A, B, C and D are partners in a firm sharing profits, in the ratio of 2 : 1 : 2 : 1. On the retirement of C, Goodwill was valued  ` 1,80,000. A, B and D decide to share future profits equally. Pass the necessary Journal entry for the treatment of goodwill.

 

Journal
Date	Particulars		L.F.	Debit  (`)	Credit  (`)
	B’s Capital A/c	Dr		30,000
	D’s Capital A/c	Dr.		30,000
	To C’s Capital A/c				60,000
	(Being Adjustment of C’s share of goodwill)

 

Working Notes:

WN1:Calculation of Gaining Ratio

A :B :C :D=2:1:2:1(Old ratio)

A :B :D =1:1:1(New ratio)

Gaining Ratio = New Ratio - Old Ratio

A's Gain =1/3−2/6=2−2/6=0

B's Gain =1/3−1/6=2−1/6=1/6

D's Gain =1/3−1/6=2−1/6=1/6

A:B:D=0:1:1

WN2: Calculation of Retiring Partner’s Share of Goodwill
C's share of goodwill=1,80,000×2/6=` 60,000

C's share of goodwill will be brought by B and D in their gaining ratio1:1

Therefore, B's Capital A/c will be debited with 60,000×1/2=` 30,000

And, D's Capital A/c will be debited with 60,000×1/2=` 30,000