Question 56:
Amrit, Bhanu and Charu were partners in a firm sharing profits equally. Bhanu retired on 30th September, 2022. Profit till the date of retirement was to be estimated based on last year's profit. Profit for the year ended 31st March, 2022, 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
Question 57:
Amar, Bhuvi and Charan were partners in a firm sharing profits
equally. Bhuvi retired on 30th September, 2022. Profit or loss till the date of
retirement was to be estimated based on last year's profit. Loss for the year
ended 31st March, 2022 was `
1,80,000.
Calculate Bhuvi's share of loss till her retirement and pass Journal entry / entries for the same when:
(i) The profit-sharing ratio between Amar and Charan does not change; and
(ii) The new profit-sharing ratio between Amar and Charan
changes to 3: 2.
Answer:
|
Date |
Particulars |
|
` |
` |
|
(Case) |
Bhuvi’s Capital A/c |
Dr. |
60,000 |
|
|
1. |
To Profit and Loss Suspense A/c A/c |
|
|
60,000 |
|
|
(Bhavi was compensated for his share of goodwill ) (W.N. – 1) |
|
|
|
|
(Case) |
Bhuvi’s Capital A/c |
Dr. |
60,000 |
|
|
2. |
To Amar’s Capital A/c |
|
|
48,000 |
|
|
To Charu’s Capital A/c |
|
|
12,000 |
|
|
(Bhavi was compensated for his share of goodwill) (W.N. – 2) |
|
|
|
Working notes:
Loss for the year ended 31st March, 2022 was ` 1,80,000.
W.N. – 1 ((i) The
profit-sharing ratio between Amar and Charan does not change)
Profit sharing ratio of Amrit, Bhanu and Charu was 1:1:1
Loss for the year ended 31st March, 2021 was ` 1,80,000.
Bhavi's share of profit = 1,80,000×1/3 = 60,000
W.N.-2 ((ii) The new profit-sharing ratio between Amar and Charan 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
B= 60,000×1/5=12,000
Question 58:
Yogesh, Naresh and Pavesh were partners in a firm sharing profits in the ratio of 2: 2: 1. Naresh retired on 1st October, 2022. In terms of the Partnership Deed, financial statements were prepared as on date of retirement and profit was determined as ` 7,20,000.
(i) Pass the Journal entries for distribution of profit for the period.
(ii) Pass the Journal entries if loss of ` 3,60,000 was incurred.
Answer:
|
Date |
Particulars |
|
` |
` |
|
(Case) |
Profit & Loss Appropriation A/c |
Dr. |
7,20,000 |
|
|
1. |
To Yogesh’s Capital A/c |
|
|
2,88,000 |
|
|
To Naresh’s Capital A/c |
|
|
2,88,000 |
|
|
To Pavesh’s Capital A/c |
|
|
1,44,000 |
|
|
(Bhavi was compensated for his share of goodwill ) (W.N. – 1) |
|
|
|
|
(Case) |
Yogesh’s Capital A/c |
Dr. |
1,44,000 |
|
|
2. |
Naresh’s Capital A/c |
Dr. |
1,44,000 |
|
|
|
Pavesh’s Capital A/c |
Dr. |
72,000 |
|
|
|
To Profit & Loss Appropriation A/c |
|
|
3,60,000 |
|
|
(Bhavi was compensated for his share of goodwill) (W.N. – 2) |
|
|
|
Working Notes:
W.N. – 1 ((i) Pass
the Journal entries for distribution of profit for the period.)
Profits sharing in the ratio of 2: 2: 1
Yogeshs = 7,20,000×2/5=2,88,000
Nareshs = 7,20,000×2/5=2,88,000
Pavesh = 7,20,000×1/5=1,44,000
W.N. – 2 ((ii) Pass
the Journal entries if loss of ` 3,60,000 was
incurred)
Profits sharing in the ratio of 2: 2: 1
Yogeshs = 3,60,000 ×2/5 = 1,44,000
Nareshs = 3,60,000 ×2/5 = 1,44,000
Pavesh = 3,60,000 ×1/5
= 72,000
Question 59:
The Partnership Deed of Aman, Bharat and Chetan has a clause that any partner may retire from the firm on the following terms by giving six months' notice in writing. The retiring partner shall be paid:
(a) The amount standing to the credit of his Capital Account and Current Account.
(b) His share of profit to the date of retirement, calculated on the basis of the average profit of the three preceding completed years, if he retires in-between the year.
(c)His Share of Goodwill of the firm calculated on the basis of 1% times the average profit of the three preceding completed years.
(d) Assets shall be revalued and liabilities re-assessed. Retiring partner will get his share in the gain (profit and will bear loss, if any.
Chetan gave notice on 31st March, 2022 to retire with effect from 30th September, 2022. On that date, the balance of his capital was ` 1,60,000 and his Current Account (in debit) ` 5,000. The profits for the three preceding completed years were: I- ` 45,000, II- ` 30,000 and III- ` 24,000.
Revaluation of assets and reassessment of liabilities resulted in neither gain (profit) nor loss.
What amount is due to Chetan in accordance with the partnership agreement?
Answer:
|
CHETAN'S CURRENT ACCOUNT |
|||
|
Particulars |
`
(Dr.) |
Particulars |
`
(Cr.) |
|
To Balance bld |
5,000 |
By Profit & Loss Suspense A/c |
5,500 |
|
To Chetan's Capital A/c (Balancing Figure) |
17,000 |
By Aman's Current A/c (Share of Goodwill) |
8,250 |
|
|
|
By Bharat's Current A/c (Share of Goodwill) |
8,250 |
|
|
22,000 |
|
22,000 |
|
|
|
|
|
Working Notes:
W.N. – 1 (Calculation
of Share of Profit)
The profits for the three preceding completed years were: I- ` 45,000, II- ` 30,000 and III- ` 24,000.
Average Profit= 45,000+30,000+24,000/3= 33,000
Share of Chetan’s
Profit= 33,000×1×6/3×12=5,500
W.N. – 1 (Calculation
of Share of Goodwill)
Average Profit= 45,000+30,000+24,000/3= 33,000
Firm’s Goodwill= 33,000×1.5=49,500
Chetan’s Share of Goodwill=49,500×1/3=16,500
Chetan will be compensated by Amar and Bharat in 1:1
Amar and Bharat =
16,500×1/2=8,250
Question 60:
Amit, Bunty and Charan are partners sharing profits and losses in the ratio of 2: 2:1. Charan retired on 30th June, 2023. The Balance Sheet of the firm on 31st March, 2023 was as follows:
|
Liabilities |
` |
Assets |
` |
|
|
Capital Accounts: |
|
Building |
10,00,000 |
|
|
Amit |
6.00,000 |
|
Investments |
1,25,000 |
|
Bunty |
6,00,000 |
|
Stock |
2,50,000 |
|
Charan |
4,00,000 |
16,00,000 |
Debtors |
4,00,000 |
|
employee’s' Compensation Reserve |
1,00,000 |
Cash at Bank |
2,00,000 |
|
|
General Reserve |
3,00,000 |
Cash in Hand |
1,25,000 |
|
|
Creditors |
1,00,000 |
|
|
|
|
|
21,00,000 |
|
21,00,000 |
|
It was agreed that amount payable to Charan will be determined by making following adjustments
(a) Building be valued at ` 12,00,000.
(b) Investment be valued at ` 1,00,000.
(c) Stock to be valued at ` 3,00,000.
(d) Goodwill of the firm be valued at 2 years' purchase of average profit of last 5 years.
(e) Charans share of profit up to the date of retirement be calculated on the basis of average profit of the preceding three years.
Profits of the preceding five years were as under:
|
Years |
2018-19 (`) |
2019-20 (`) |
2020-21 (`) |
2021-22 (`) |
2022-23 (`) |
|
Profit |
2,00,000 |
2,35,000 |
3,00,000 |
2,75,000 |
3,25,000 |
Prepare: (i) Revaluation Account; (ii) Partners' Capital Accounts and (ii) Balance Sheet after Charan's retirement.
Answer:
|
|
Revaluation Account |
||||
|
Particulars |
(`) Dr. |
Particulars |
(`) Cr. |
||
|
Investment |
25,000 |
Building |
2,00,000 |
||
|
Gain transferred
to: |
|
Stock |
50,000 |
||
|
Amit’s Capital A/c |
90,000 |
|
|
|
|
|
Bunty’s Capital A/c |
90,000 |
|
|
|
|
|
Charan ’s Capital A/c |
45,000 |
2,25,000 |
|
|
|
|
|
2,50,000 |
|
2,50,000 |
||
|
Dr. |
Partners' Capital Accounts |
Cr. |
|||||
|
Particulars |
Amit |
Bunty |
Charan |
Particulars |
Amit |
Bunty |
Charan |
|
Charan ’s Capital A/c |
53,400 |
53,400 |
- |
Balance
B/d |
6,00,000 |
6,00,000 |
4,00,000 |
|
Charan ’s Loan A/c |
- |
- |
6,46,800 |
Revaluation
A/c |
90,000 |
90,000 |
45,000 |
|
Balance C/d |
7,96,600 |
7,96,600 |
- |
W.C.R.
A/c |
40,000 |
40,000 |
20,000 |
|
|
|
|
|
G.
R. A/c |
1,20,000 |
1,20,000 |
60,000 |
|
|
|
|
|
Amit’s
Capital A/c |
- |
- |
53,400 |
|
|
|
|
|
Bunty’s
Capital A/c |
- |
- |
53,400 |
|
|
|
|
|
P&L
Suspense A/c |
|
|
15,000 |
|
|
8,50,000 |
8,50,000 |
6,46,800 |
|
8,50,000 |
8,50,000 |
6,46,800 |
|
Balance Sheet (after Charan's retirement) |
||||
|
Liabilities |
` |
Assets |
` |
|
|
Capital Accounts: |
|
Building |
12,00,000 |
|
|
Amit |
7,96,600 |
|
Investments |
1,00,000 |
|
Bunty |
7,96,600 |
15,93,200 |
Stock |
3,00,000 |
|
Charan ’s Loan |
|
6,46,800 |
Debtors |
4,00,000 |
|
Creditors |
1,00,000 |
Cash at Bank |
2,00,000 |
|
|
|
|
Cash in Hand |
1,25,000 |
|
|
|
|
P&L Suspense A/c |
15,000 |
|
|
|
23,40,000 |
|
23,40,000 |
|
Working Notes:
W.N.- 1: Distribution
of employee’s' Compensation Reserve
A = 1,00,000×2/5=40,000
B = 1,00,000×2/5=40,000
C = 1,00,000×1/5=20,000
W.N.- 2: Distribution
of General Reserve
A = 3,00,000×2/5 = 1,20,000
B = 3,00,000×2/5 = 1,20,000
C = 3,00,000×1/5 = 60,000
W.N.- 3: Valuation of
goodwill
Average Profit = 2,00,000+2,35,000+3,00,000+2,75,000+3,25,000/5=2,67,000
Goodwill =2,67,000×2= 5,34,000
Chetan’s share of Goodwill= 5,34,000×1/5=1,06,800
Chetan will be compensated by Amit and Bunty in 2:2 or 1:1 as follow
Amount of compensation = 1,06,800×1/2=53,400
W.N.- 3: Calculation
of Share of Profit till the date of retirement on the basis of past three year
profits
Average Profit = 3,00,000 + 2,75,000 + 3,25,000/3=3,00,000
Profit share of
Chetan = 3,00,000 ×1×6/5×12= 15,000
Ts Grewal Solution 2023-2024
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Class 12 / Volume – I