# 12th | Ts grewal 2021-2022 Question 16 to 20 | Retirement of a partner

#### Question 16:

A, B and C are partners sharing profits in the ratio of 3 : 2 : 1. B retired and the new profit-sharing ratio between A and C was 2 : 1. On B's retirement, the goodwill of the firm was valued at  ` 90,000. Pass necessary Journal entry for the treatment of goodwill on B's retirement.

 Journal Particulars L.F. Debit Amount ` Credit Amount ` A’s Capital A/c Dr. 15,000 C’s Capital A/c Dr. 15,000 To B’s Capital A/s 30,000 (Being Adjustment B’s share of goodwill made)

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (A, B and C) = 3 : 2 : 1

B retires from the firm.

New Ratio (A and C) = 2 : 1

Gaining Ratio=New Ratio − Old Ratio

A‘s share=2/3 -3/6 =4-3/6=1/6

B‘s share= 1/3 -1/6 =2-1/6=1/6

Gaining Ratio = 1 : 1

Goodwill of the firm = ` 90,000

B’s share of goodwill =90,000×2/3=30,000

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 1 : 1).

A’s and C’s capital will be debited =30,000×1/2=15000

Page No 6.57:

Question 17: Aman, Bimal and Deepak are partners sharing profits in the ratio of 2: 3: 5. The goodwill of the firm has been valued at `37,500. Aman retired. Bimal and Deepak decided to share profits equally in future.

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 Amount ( `) Credit Amount ( `) Bimal’s capital a/c Dr. 7,500 To Amal’s capital a/c 7,500 (Being Goodwill adjusted)

#### Question 18:

Hanny, Pammy and Sunny are partners sharing profits in the ratio of 3 : 2 : 1. Goodwill is appearing in the books at a value of  ` 60,000. Pammy retires and at the time of Pammy's retirement, goodwill is valued at  ` 84,000. Hanny and Sunny decided to share future profits in the ratio of 2 : 1. Record the necessary Journal entries.

 Journal Date Particulars L.F. Debit Amount ( `) Credit Amount ( `) Hanny’s Capital A/c Dr. 30,000 Pammy’s Capital A/c Dr. 20,000 Sunny’s Capital A/c 10,000 To Goodwill A/c 60,000 (Being Old goodwill written-off in old ratio) Hanny’s Capital A/c Dr. 14,000 Sunny’s Capital A/c Dr. 14,000 To Pammy’s Capital A/c 28,000 (Being Adjustment for goodwill in gaining ratio)

Working Notes:

WN1: Calculation of Pammy’s Share in Goodwill

Pammy's share=Firm's Goodwill×Pammy's Profit SharePammy's share =84,000×26=28,000 to be borne by gaining partners in gaining ratio

WN2: Calculation of Gaining Ratio

Gaining Ratio = New Ratio − Old Ratio

Hanny's gain=2/3−3/6=1/6

Sunny's gain=1/3−1/6=1/6

Gaining Ratio=1:1

#### Question 19:

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 Amount ` Credit Amount ` 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

#### Question 20:

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 Amount (`) Credit Amount (`) 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

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