Retirement of Partner
I. Following QUESTIONS are of 1 Mark .
1. A, B and C are partners sharing profits and losses in the ratio 5:3:2. B retires. Calculate the new ratio.
2. X, Y and Z are partners sharing profits and losses in the ratio of 1/5, 1/3 and 7/15 respectively. Z retires and his share is taken up by X and Y in the ratio of 3:2. Calculate the new Ratio & gaining ratio.
3. X, Y and Z are partners sharing profits and losses in the ratio of 4/8, 1/8,and 3/8 respectively. Z retires and surrenders4/9TH of his share in favour of X and remaining in favour of Y. Calculate. the New Ratio.
4.A,B and C are partners sharing profits and losses in the ratio 4:3:2. B retires and the goodwill is valued at `10,800. No goodwill appears as yet in the books of the firm. Assuming that A and C will share future profits in the ratio5:3, make entries for goodwill.
5. P,Q and R are partners sharing profits and losses in the ratio 4:3:1. Q retires from the firm selling his share of profit to P for `3,600 and R for `4,500. The profit for the year after Q’s retirement was `10, 500.Calculate the new profit sharing ratio and pass journal entries.
6. A, B and C are equal partners in a firm. B retires and his claim including his Capital and his share of goodwill is `40,000. He is paid in kind a vehicle valued at `20,000 unrecorded in the books of the firm till the date of retirement and the balance in cash. Give the journal entries.
7. A ,B and C are partners sharing profits as 20%,30% and 50%. A decided to retire with the consent of other partners and sold his share to B. Goodwill was valued at two and a half years purchase of the average profits of last three yea`
Profits of these three years were ` 50,000, `70,000 and ` 60,000. Reserve fund stood in the balance sheet at ` 30,000 at the time of his retirement. You are required to record necessary journal entries to record above adjustments on A’s retirement.
8. A,B and C are partners in a firm sharing profits in the ratio of 2:3:4 . On April 1, 2013, A retires and on that date there was a debit balance of ` 72,000 in the profit and loss account and a General Reserve of `90,000 in the book. B and C decided to share future profits in the ratio of 2:1.Show the necessary journal entry for the treatment of profit and loss account balance on A’s retirement.
II. Following QUESTIONS are of 3 Marks .
9. Journalise the following :-
(a) Chander, Tara and Ravi were partners in a firm sharing profits in the ratio of 2:1:2 on 15.02.2007 Chander died and the new profit sharing ratio between Tara & Ravi was 4:11. On Chander’s death the goodwill of the firm was valued at ` 90,000. Calculate gaining ratio and pass necessary journal entry for the treatment of goodwill on Chander’s death without opening goodwill account.
(b) A, B, C and D are partners sharing profits in the ratio of 3:4:3:2. On the retirement of C, the goodwill was valued at ` 60,000. A, B and D decided to share future profits equally. Pass the necessary journal entry for the treatment of goodwill, without opening Goodwill Account.
III. Following QUESTIONS are of 6 Marks .
10. X,Y and Z are partners sharing profits and losses in the ratio of their capitals. Y retired on 31-12-2014 the date on which the B/S stood as under.
The other terms agreed upon are as under:-
a) Prepaid Insurance `1,000
b) Buildings appreciated by 10%
c) Provision for doubtful debts to be 5%
d) Machinery be depreciated by 5%
e) Provision of `1,500 be made for outstanding expenses.
f) Goodwill of the firm is valued at `18,000 and Y’s share is adjusted in the account of X and Z. Y is paid `5,000 immediately and the balance paid into 4 equal yearly installments together with 10% interest. Pass Journal entries, Prepare Revaluation a/c, Capital a/c, Balance sheet and Y’s loan a/c when it is paid into four equal yearly installments.
11. X,Y and Z are partners sharing profits and losses in the ratio of their capitals. Y retired on 31-12- 2009 and the date on which the B/S stood as under.
The following adjustments were made:-
a)Building appreciated by 20%, Stock depreciated by 10%, Provision for doubtful debts was to be 5% and a reserve for legal charges payable was to be made at `1,800.
b) Goodwill of the firm be valued at `48,000.
c) Rs40,000 from Y’s capital account be transferred to his loan account and balance be paid In cash.
d)The capital of the new firm be fixed at `1,00,000 and the new profit sharing ratio is 3:2.
Give necessary ledger account and prepare the new Balance sheet.
12. L, M and N were partners sharing profits as 50%,30% and 20% respectively. On March 31,2014 ,their Balance Sheet stood as follows:
Balance of L, M and N as at March 31,2014
On this date M retires and L and N agreed to continue on the following terms:
a) Firm’s goodwill was valued at ` 51,000 and it was decided to adjust M’s goodwill into capital accounts of continuing partners.
b) There is a claim for workmen’s compensation to the extent of ` 4,000. Investments are brought down to ` 15,000.
c) Provision for bad debts is to be reduced by ` 1,000.
d) M will be paid ` 8,200 in cash and balance will be transferred to his Loan Account which will be paid in 3 equal installments together with interest @ 10% p.a.
e) L’s and N’s capital will be adjusted in their new profit sharing ratio i.e.3:2 through cash accounts prepare necessary ledger accounts and Balance Sheet.
13. A, B and C were partners sharing profits in the proportion 5:3:2 respectively.
The Balance sheet of the firm on 31st Dec 2014 was as follows:-
They had taken a joint life policy of the face value of `40,000. On 31st Dec.2014, its surrender value was `8,000. On this date B decided to retire and for this purpose:
a) Goodwill was valued at `30,000.
b) Fixed assets were valued at `60,000.
c) Stock was considered as worth `20,000.
B was to be paid through cash brought in by A and C in such a way as to make their Capitals proportionate to their new profit sharing ratio which was to be A 3/5 and C 2/5. The Joint life policy is not to appear in the Balance Sheet. Prepare Revaluation a/c, Capital Account and the Balance Sheet.
Please click on below link to download CBSE Class 12 Accountancy Retirement of A Partner Worksheet Set D
