When existing total capital of remaining partners is to be in New Profit-sharing Ratio
Question 46:
Shweta, Meenu and Asha were partners in a firm sharing profits and losses in the ratio of 3:5:2. Meenu retired on 1st April, 2022. After making all adjustments relating to revaluation, goodwill and accumulated profits, etc., Capital Accounts of Shweta and Asha showed credit balance of 3,00,000 and 1,00,000respectively. It was decided to adjust the capitals of Shweta and Asha in their new profit-sharing ratio.
Pass necessary Journal entries for bringing in or withdrawal of the necessary amounts involved. Show your working clearly.
(CBSE 2023)
Answer:
|
Date |
Particulars |
|
Dr. (₹) |
Cr. (₹) |
|
(i) |
Bank A/c |
Dr. |
60,000 |
|
|
|
To Aastha's Capital A/c |
|
|
60,000 |
|
|
(Being amount brought) |
|
|
|
|
(ii) |
Shweta's Capital A/c |
|
60,000 |
|
|
|
To Bank A/c |
|
|
60,000 |
|
|
(Being amount withdrawn) |
|
|
|
Total Capital of Shweta and Asha showed credit balance of 3,00,000+1,00,000=4,00,000
New Ratio of Shweta and Asha = 3:2
New Capital as per New Ratio of Shweta and Asha
Shweta = 4,00,000×3/5=2,40,000
Asha = 4,00,000×2/5=1,60,000
Capital adjustment requirement
|
Shweta |
Adjusted Capital |
3,00,000 |
|
|
New Capital |
2,40,000 |
|
|
Amount withdrawn |
60,000 |
|
|
|
|
|
Aastha |
Adjusted Capital |
1,00,000 |
|
|
New Capital |
1,60,000 |
|
|
Amount brought |
60,000 |
Question 47:
Chandan, Deepak and Elvish were partners in a firm sharing profits and losses in the ratio of 1:2:2. Their
Balance Sheet as at 31st March, 2024 stood as follows:
BALANCE SHEET OF CHANDAN, DEEPAK AND ELVISH as at 3 1st March, 2024
|
Liabilities |
|
₹ |
Assets |
₹ |
|
Capitals: |
|
|
Fixed Assets |
27,00,000 |
|
Chandan |
7,00,000 |
|
Stock |
3.00,000 |
|
Deepak |
5,00,000 |
|
Debtors |
2,00,000 |
|
Elvish |
3,00,000 |
15,00,000 |
Cash |
1,00,000 |
|
General Reserve |
|
4,50,000 |
|
|
|
Creditors |
|
13,50,000 |
|
|
|
|
|
33,00,000 |
|
33,00,000 |
Chandan retired from the firm on 1st April, 2024 on the following terms:
(Ö) Fixed assets were to be depreciated by 10%.
(i) Debtors of ₹ 30,000 were to be written off as bad debts.
(ii) Goodwill of the firm was valued at 6,00,000 and the retiring partner's share is adjusted through the
Capital Accounts of the remaining partners.
(iv) Chandan was paid through cash brought in by Deepak and Elvish in such a way so as to make their
capitals proportionate to their new profit-sharing ratio.
Prepare Revaluation Account and Partners' Capital Accounts.
(CBSE 2025)
Answer:
|
Revaluation Account |
|||
|
Particulars |
(₹) |
Particulars |
(₹) |
|
To Fixed Assets |
2,70,000 |
By Loss transferred to: |
|
|
To Bad Debts |
30,000 |
Chandan's Capital A/c |
60,000 |
|
Deepak's Capital A/c |
1,20,000 |
||
|
Elvish's Capital A/c |
1,20,000 |
||
|
3,00,000 |
3,00,000 |
||
Partners' Capital Accounts
|
Capital Accounts |
|||||||
|
Particulars |
Chandan |
Deepak |
Elvish |
Particulars |
Chandan |
Deepak |
Elvish |
|
To Revaluation A/c |
60,000 |
1,20,000 |
1,20,000 |
By Balance b/d |
7,00,000 |
5,00,000 |
3,00,000 |
|
To Chandan's Cap. |
- |
60,000 |
60,000 |
By Gen. Reserve |
90,000 |
1,80,000 |
1,80,000 |
|
To Cash A/c |
8,50,000 |
- |
- |
By Deepak's Cap. |
60,000 |
- |
- |
|
To Balance c/d |
- |
5,00,000 |
3,00,000 |
By Elvish's Cap. |
60,000 |
- |
- |
|
(Adjusted capital) |
|||||||
|
9,10,000 |
6,80,000 |
4,80,000 |
9,10,000 |
6,80,000 |
4,80,000 |
||
|
To Balance B/d |
- |
5,00,000 |
3,00,000 |
||||
|
To Balance c/d |
- |
8,25,000 |
8,25,000 |
(Adjusted capital) |
|||
|
(New Capital) |
By Cash A/c |
- |
3,25,000 |
5,25,000 |
|||
|
9,10,000 |
9,30,000 |
9,30,000 |
9,10,000 |
9,30,000 |
9,30,000 |
||
Working Notes:
WN 1: Adjustment of Goodwill to compensate Chandan:
Firm's Goodwill = ₹ 6,00,000
Chandan's share = 6,00,000 ×51=₹1,20,000
Deepak and Elvish will compensate in Gaining Ratio (1:1)
Deepak's share = 1,20,000×1/2=₹60,000
Elvish's share = 1,20,000×1/2=₹60,000
WN 2: Calculation of new Capital
Adjusted Capital of Deepak and Elvish is 5,00,000+3,00,000 = 8,00,000
Capital to be paid to Chandan = 8,50,000
Total capital of new Firm = 8,00,000 + 8,50,000 = 16,50,000
(Note: Total Capital of new firm is calculated including retiring partner’s Capital)
Each partner’s Capital of Deepak and Elvish in their profit share ratio (1:1)
Each partner’s Capital = 16,50,000 ×1/2= 8,25,000
Deepak will bring in cash = 8,25,000 -5,00,000 = 3,25,000
Elvish will bring in cash = 8,25,000 -3,00,000 = 5,25,000
Question 48:
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.
(CBSE 2019)
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 |
|||||
|
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 1Calculation 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 2Adjustment 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
3Adjustment
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 49:
Following is the Balance Sheet of Kusum, Sneh and Usha as on 31st March, 2026, 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, 2026, 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.
(AI 2012 C, Modified)
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 |
|
|
|
|
|
|
|
|
|
|||||||
|
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, 2025 |
||||
|
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 1Calculation 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 2026-2027
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Class 12 / Volume – I
Chapter 5 – Retirement of a Partner