Question 36:
A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 3. Their Balance Sheet as at 31st March, 2026 is:
|
Liabilities |
(₹) |
Assets |
(₹) |
||
|
Creditors |
7,000 |
Land and Building |
36,000 |
||
|
Bills Payable |
3,000 |
Plant and Machinery |
28,000 |
||
|
Reserves |
20,000 |
Computer Printer |
8,000 |
||
|
Capital A/cs: |
|
Stock |
20,000 |
||
|
A |
32,000 |
|
Sundry Debtors |
14,000 |
|
|
B |
24,000 |
|
Less: Provision for Doubtful Debts |
2,000 |
12,000 |
|
C |
20,000 |
76,000 |
Bank |
2,000 |
|
|
|
|
|
|
|
|
|
|
1,06,000 |
|
1,06,000 |
||
|
|
|
|
|
||
On 1st April, 2026, B
retired from the firm on the following terms:
(a) Goodwill of the firm is to be valued at ₹ 14,000.
(b) Stock, Land and Building are to be appreciated by 10%.
(c) Plant and Machinery and Computer Printer are to be reduced by 10%.
(d) Sundry Debtors are considered to be good.
(e) There is a liability of ₹ 2,000 for the payment of outstanding
salary to the employees of the firm. This liability was not provided in the
Balance Sheet but the same is to be recorded now.
(f) Amount payable to B
is to be transferred to his Loan Account.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet
of A and C after B's retirement.
Answer:
|
Revaluation Account |
|||||
|
Dr. |
|
Cr. |
|||
|
Particulars |
(₹) |
Particulars |
(₹) |
||
|
Plant
and Machinery |
2,800 |
Stock |
2,000 |
||
|
Electronic
Typewriter |
800 |
Land
and Building |
3,600 |
||
|
Outstanding Salary |
2,000 |
Provision for Doubtful Debts |
2,000 |
||
|
Profit transferred to: |
|
|
|
||
|
A’s Capital A/c |
800 |
|
|
|
|
|
B’s Capital A/c |
600 |
|
|
|
|
|
C’s Capital A/c |
600 |
2,000 |
|
|
|
|
|
|
|
|
||
|
|
7,600 |
|
7,600 |
||
|
|
|
|
|
||
|
Partners’ Capital Accounts |
|||||||
|
Dr. |
|
Cr. |
|||||
|
Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
|
B’s Capital A/c |
2,400 |
|
1,800 |
Balance b/d |
32,000 |
24,000 |
20,000 |
|
B’s Loan A/c |
|
34,800 |
|
Reserves |
8,000 |
6,000 |
6,000 |
|
Balance c/d |
38,400 |
|
24,800 |
Revaluation A/c |
800 |
600 |
600 |
|
|
|
|
|
A’s Capital A/c |
|
2,400 |
|
|
C’s Capital A/c |
|
1,800 |
|
||||
|
|
40,800 |
34,800 |
26,600 |
|
40,800 |
34,800 |
26,600 |
|
|
|
|
|
|
|
|
|
|
Balance Sheet |
|||
|
an on April 01, 2026 (after B’s Retirement) |
|||
|
Liabilities |
(₹) |
Assets |
(₹) |
|
Creditors |
7,000 |
Land and Building (36,000 + 3,600) |
39,600 |
|
Bills Payable |
3,000 |
Plant and Machinery (28,000 – 2,800) |
25,200 |
|
B’s Loan |
34,800 |
Electronic Typewriter 8000 – 800) |
7,200 |
|
Capital A/c: |
|
Stock (20,000 + 2,000) |
22,000 |
|
A |
38,400 |
Sundry Debtors |
14,000 |
|
C |
24,800 |
Bank |
2000 |
|
Outstanding Salary |
2,000 |
|
|
|
|
1,10,000 |
|
1,10,000 |
|
|
|
|
|
Working Note:
Adjustment of Goodwill
Old Ratio (A, B and C) = 4 : 3 : 3
B retires from the firm.
∴ Gaining Ratio = 4 : 3
Goodwill of the firm = ₹ 14,000
B’s Share of Goodwill = 14,000×3/10=42,000
This share
of goodwill is to be distributed between A and C in their gaining ratio (i.e. 4 : 3).
A‘s share= 4,200×4/7=2,400
C‘s share= 4,200×3/7=1,800
Question 37:
X, Y and Z are partners sharing profits and losses in the ratio of 3 : 2 : 1. Balance Sheet of the firm as at 31st March, 2026 was as follows:
|
Liabilities |
(₹) |
Assets |
(₹) |
||
|
Creditors |
21,000 |
Cash at Bank |
5,750 |
||
|
Workmen Compensation Reserve |
12,000 |
Debtors |
40,000 |
|
|
|
Investments Fluctuation Reserve |
6,000 |
Less: Provision for Doubtful Debts |
2,000 |
38,000 |
|
|
Capital A/cs: |
|
Stock |
|
30,000 |
|
|
X |
68,000 |
|
Investment (Market Value ₹ 17,600) |
15,000 |
|
|
Y |
32,000 |
|
Patents |
10,000 |
|
|
Z |
21,000 |
1,21,000 |
Machinery |
50,000 |
|
|
|
|
Goodwill |
6,000 |
||
|
|
|
Advertisement Expenditure |
5,250 |
||
|
|
|
|
|
|
|
|
|
1,60,000 |
|
1,60,000 |
||
|
|
|
|
|
||
Z retired on
1st April, 2026 on the following terms:
(a) Goodwill of the firm is to be valued at ₹ 34,800.
(b) Value of Patents is to be reduced by 20% and that of machinery to 90%.
(c) Provision for doubtful debts is to be created @ 6% on debtors.
(d) Z took
over the investment at market value.
(e) Liability for Workmen Compensation to the extent of ₹ 750 is to
be created.
(f) A liability of ₹ 4,000 included in creditors is not to be paid.
(g) Amount due to Z to
be paid as follows: ₹ 5,067 immediately, 50% of the balance within one
year and the balance by a draft for 3 Months.
Give necessary Journal entries for the treatment of goodwill, prepare
Revaluation Account, Capital Accounts and the Balance Sheet of the new firm.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit (₹) |
Credit (₹) |
|
|
2026 |
|
|
|
|
|
|
April 01 |
X’s Capital A/c |
Dr. |
|
3,000 |
|
|
|
Y’s Capital A/c |
Dr. |
|
2,000 |
|
|
|
Z’s Capital A/c |
Dr. |
|
1,000 |
|
|
|
To Goodwill A/c |
|
|
|
6,000 |
|
|
(Existing goodwill written off) |
|
|
|
|
|
|
|
|
|
|
|
|
April 01 |
X’s Capital A/c |
Dr. |
|
3,480 |
|
|
|
Y’s Capital A/c |
Dr. |
|
2,320 |
|
|
|
To Z’s Capital A/c |
|
|
|
5,800 |
|
|
(Z’s share of goodwill credited to him and gaining partners debited in gaining ratio) |
|
|
|
|
|
|
|
|
|
|
|
|
Revaluation Account |
||||||
|
Dr. |
|
Cr. |
||||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
|||
|
Patents |
2,000 |
Investments (17,600 – 15,000) |
2,600 |
|||
|
Machinery |
5,000 |
Creditors |
4,000 |
|||
|
Prov. for Doubtful Debts |
400 |
Loss on Revaluation transferred |
|
|||
|
|
|
X’s Capital A/c |
400 |
|
||
|
|
|
Y’s Capital A/c |
267 |
|
||
|
|
|
Z’s Capital A/c |
133 |
800 |
||
|
|
|
|
|
|||
|
|
7,400 |
|
7,400 |
|||
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
Partners’ Capital Accounts |
|||||||||
|
Dr. |
|
Cr. |
|||||||
|
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
||
|
Goodwill A/c |
3,000 |
2,000 |
1,000 |
Balance b/d |
68,000 |
32,000 |
21,000 |
||
|
Revaluation A/c |
400 |
267 |
133 |
X’s Capital A/c |
- |
- |
3,480 |
||
|
Z’s Capital A/c |
3,480 |
2,320 |
- |
Y’s Capital A/c |
- |
- |
2,320 |
||
|
Advertisement Expenditure A/c |
2,625 |
1,750 |
875 |
Workmen Compensation Reserve A/c* |
5,625 |
3,750 |
1,875 |
||
|
Investments A/c |
- |
- |
17,600 |
Investment Fluctuation Reserve A/c* |
3,000 |
2,000 |
1,000 |
||
|
Bank A/c |
- |
- |
5,067 |
|
|
|
|
||
|
Z’s Loan A/c |
- |
- |
2,500 |
|
|
|
|
||
|
Bills Payable A/c |
- |
- |
2,500 |
|
|
|
|
||
|
Balance c/d |
67,120 |
31,413 |
- |
|
|
|
|
||
|
|
76,625 |
37,750 |
29,625 |
|
76,625 |
37,750 |
29,625 |
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet as on April 01, 2026 after Z’s retirement |
|||||
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
|
Creditors |
17,000 |
Cash at Bank (5,750 – 5,067) |
683 |
||
|
Workmen Compensation Claim |
750 |
Stock |
30,000 |
||
|
Bills Payable |
2,500 |
Patents |
8,000 |
||
|
Capital A/c’s: |
|
|
Debtors A/c |
40,000 |
|
|
X |
67,120 |
|
Less: Prov. for D/D |
2,400 |
37,600 |
|
Y |
31,413 |
98,533 |
Machinery |
45,000 |
|
|
Z’s Loan |
2,500 |
|
|
||
|
|
1,21,283 |
|
1,21,283 |
||
|
|
|
||||
Working Note:
Amount due to Z = (21,000+3,480+2,320+1,875+1,000) - (1,000+133+875+17,600) =10,067
Amount paid on Retirement immediately: ₹ 5,067
Amount paid within one year: 50% of 5,000 = ₹ 2,500
Amount payable by Bills of Exchange: ₹ 2,500 (balance 50%)
Question 38:
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, 2023. 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.
Answer:
|
Dr. |
Bhaskar’s Loan A/c |
Cr. |
|||||
|
Date |
Particulars |
(₹) |
Date |
Particulars |
(₹) |
||
|
2023 |
|
|
2023 |
|
|
||
|
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 |
2024 |
|
|
||
|
|
|
|
March 31 |
By Interest on Loan A/c |
30,000 |
||
|
|
|
|
|
(3,00,000 × 10/100) |
|
||
|
|
|
3,30,000 |
|
|
3,30,000 |
||
|
2024 |
|
|
2024 |
|
|
||
|
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 |
2025 |
|
|
||
|
|
|
|
March 31 |
By Interest on Loan A/c |
20,000 |
||
|
|
|
|
|
(2,00,000 × 10/100) |
|
||
|
|
|
2,20,000 |
|
|
2,20,000 |
||
|
2025 |
|
|
2025 |
|
|
||
|
March 31 |
To Bank A/c (1,00,000 + 10,000) |
1,10,000 |
April 01 |
By balance b/d |
1,00,000 |
||
|
|
|
|
2026 |
|
|
||
|
|
|
|
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
Question 39:
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.
Answer:
|
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 |
|
|
|
|
|
|
|
|
|
Question 40:
Ram, Manohar and Joshi were partners in a firm. Manohar retired and his claim including his capital and share of goodwill was ₹1,80,000. There was an unrecorded furniture estimated at ₹ 9,000, half of which was given for an unrecorded liability of ₹18,000 in settlement of claim of ₹9,000 and remaining half was taken by Manohar at a discount of 10% in part satisfaction of his claim. Balance of Manohar's claim was discharged by bank draft. Pass necessary Journal entries to record the above transactions.
Answer:
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 |
|
|
|
|
|
|
|
Ts Grewal Solution 2026-2027
Click below for more Questions
Class 12 / Volume – I
Chapter 5 – Retirement of a Partner