Page No 6.57:
Question 21:
A, B, C and D
are partners in a firm sharing profits, in the ratio of 2 : 1 : 2 : 1. On the
retirement of C, Goodwill was valued ` 1,80,000. A, B
and D decide to share future profits equally. Pass the necessary
Journal entry for the treatment of goodwill.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit Amount (`) |
Credit Amount (`) |
|
|
|
B’s Capital A/c |
Dr |
|
30,000 |
|
|
|
D’s Capital A/c |
Dr. |
|
30,000 |
|
|
|
To C’s Capital A/c |
|
|
|
60,000 |
|
|
(Being Adjustment of C’s share of goodwill) |
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Working Notes:
WN1:Calculation of Gaining Ratio
A :B :C :D=2:1:2:1(Old ratio)
A :B :D =1:1:1(New ratio)
Gaining Ratio = New Ratio - Old Ratio
A's Gain =1/3−2/6=2−2/6=0
B's Gain =1/3−1/6=2−1/6=1/6
D's Gain =1/3−1/6=2−1/6=1/6
A:B:D=0:1:1
WN2: Calculation of Retiring Partner’s Share of Goodwill
C's share of goodwill=1,80,000×2/6=` 60,000
C's share of goodwill will be brought by B and D in their gaining ratio1:1
Therefore, B's Capital A/c will be debited with 60,000×1/2=` 30,000
And, D's Capital A/c will be debited with 60,000×1/2=` 30,000
Page No 6.57:
Question 22:
A, B and C were
partners in a firm sharing profits in the ratio of 6 : 5 : 4. Their capitals
were A − `
1,00,000; B − ` 80,000 and C − `
60,000 respectively. On 1st April, 2009, A retired from the firm and
the new profit sharing ratio between B and C was decided as 1
: 4. On A's retirement, the goodwill of the firm was valued at ` 1,80,000. Showing your calculations clearly, pass the necessary
Journal entry for the treatment of goodwill on A's retirement.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit Amount (`) |
Credit Amount (`) |
|
|
|
C’s Capital A/c |
Dr. |
|
96,000 |
|
|
|
To A’s Capital A/c |
|
|
|
72,000 |
|
|
To B’s Capital A/c |
|
|
|
24,000 |
|
|
(Being Adjustment of A’s and B’s share of goodwill) |
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Working Notes:
WN1: Calculation of Gaining Ratio
A :B :C=6:5:4(Old ratio)
B :C=1:4 (New ratio)
Gaining Ratio = New Ratio - Old Ratio
B's Gain =1/5−5/15=3−5/15= −2/15(Sacrifice)
C's Gain =4/5−4/15=1/2−4/15=8/15
WN2: Calculation of Retiring Partner’s Share of Goodwill
A's share of goodwill=1,80,000×6/15=` 72,000
B's share of goodwill=1,80,000×2/15=` 24,000
A's and B's share of goodwill be brought by C only.Therefore, C's Capital A/c will be debited with 72,000+24,000 = ` 96,000
Page No 6.57:
Question 23:
Sangeeta,
Saroj and shanti are partners sharing profits and losses
in the ratio of 5 : 3 : 2. Z retired and on the date of his
retirement, following adjustments were agreed upon:
(a) The value of Furniture is to be increased by ` 12,000.
(b) The value of stock to be decreased by ` 10,000.
(c) Machinery of the book value of ` 50,000 is to be depreciated by 10%.
(d) A Provision for Doubtful Debts @ 5% is to be created on debtors of book
value of ` 40,000.
(e) Unrecorded Investment worth `
10,000.
(f) An item of `
1,000 included in bills payable is not likely to be claimed, hence should be
written back.
Pass necessary Journal entries.
Answer:
|
Revaluation
Account |
||||||
|
Dr. |
|
Cr. |
||||
|
Particulars |
Amount ` |
Particulars |
Amount ` |
|||
|
Stock A/c |
10,000 |
Furniture A/c |
12,000 |
|||
|
Machinery A/c |
5,000 |
Investments A/c |
10,000 |
|||
|
Provision for Doubtful Debts A/c |
2,000 |
Bills Payable A/c |
1,000 |
|||
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Profit transferred to: |
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|
|
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X’s Capital A/c |
3,000 |
|
|
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Y’s Capital A/c |
1,800 |
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Z’s Capital A/c |
1,200 |
6,000 |
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||
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|
23,000 |
|
23,000 |
|||
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Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit |
Credit |
|
|
(a) |
Furniture A/c |
Dr. |
|
12,000 |
|
|
|
To
Revaluation A/c |
|
|
|
12,000 |
|
|
(Being Increase in value transferred to Revaluation
Account) |
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|
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|
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|
(b) |
Revaluation A/c |
Dr. |
|
10,000 |
|
|
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To Stock
A/c |
|
|
|
10,000 |
|
|
(Being Decrease in Stock transferred to Revaluation
Account) |
|
|
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(c) |
Revaluation A/c |
Dr. |
|
5,000 |
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To
Machinery A/c |
|
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|
5,000 |
|
|
(Being Decrease in value of machinery transferred to
Revaluation Account) |
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(d) |
Revaluation A/c |
Dr. |
|
2,000 |
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To Provision for Doubtful
Debts A/c |
|
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|
2,000 |
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|
(Being Increase in liabilities to Revaluation Account) |
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(e) |
Investments A/c |
Dr. |
|
10,000 |
|
|
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To Revaluation A/c |
|
|
|
10,000 |
|
|
(Being Increase in value transferred to Revaluation
Account) |
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|
(f) |
Bills Payable A/c |
Dr. |
|
1,000 |
|
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To Revaluation A/c |
|
|
|
1,000 |
|
|
(Being Decrease in liabilities transferred to Revaluation
Account) |
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(g) |
Revaluation A/c |
Dr. |
|
6,000 |
|
|
|
To X’s Capital A/c |
|
|
|
3,000 |
|
|
To Y’s Capital A/c |
|
|
|
1,800 |
|
|
To Z’s Capital A/c |
|
|
|
1,200 |
|
|
(Being Revaluation profit transferred to Partners’ Capital
Accounts) |
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Page No 6.58:
Question 24:
A, B and C were
partners, sharing profits and losses in the ratio of 2 : 2 : 1. B decides
to retire on 31st March, 2021. On the date of his retirement, some of the
assets and liabilities appeared in the books as follows:
Creditors `
70,000; Building `
1,00,000; Plant and Machinery `
40,000; Stock of Raw Materials `
20,000; Stock of Finished Goods `
30,000 and Debtors ` 20,000.
Following was agreed among the partners on B's retirement:
(a) Building to be appreciated by 20%.
(b) Plant and Machinery to be reduced by 10%.
(c) A Provision of 5% on Debtors to be created for Doubtful Debts.
(d) Stock of Raw Materials to be valued at ` 18,000 and Finished Goods at ` 35,000.
(e) An Old Computer previously written off was sold for ` 2,000 as scrap.
(f) Firm had to pay `
5,000 to an injured employee.
Pass necessary Journal entries to record the above adjustments and prepare the
Revaluation Account.
Answer:
|
Revaluation
Account |
||||||
|
Dr. |
|
Cr. |
||||
|
Particulars |
Amount ( `) |
Particulars |
Amount ( `) |
|||
|
Plant and Machinery (40,000 × 10%) |
4,000 |
Building (1,00,000 × 20%) |
20,000 |
|||
|
Provision for Doubtful Debts |
1,000 |
Stock of Finished Goods |
5,000 |
|||
|
Stock of Raw Materials |
2,000 |
Computer |
2,000 |
|||
|
Workmen’s Compensation Claim |
5,000 |
|
|
|||
|
Profit transferred to: |
|
|
|
|||
|
A’s Capital A/c |
6,000 |
|
|
|
||
|
B’s Capital A/c |
6,000 |
|
|
|
||
|
C’s Capital A/c |
3,000 |
15,000 |
|
|
||
|
|
27,000 |
|
27,000 |
|||
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|||
|
Journal |
||||
|
Particulars |
L.F. |
Debit Amount ( `) |
Credit Amount ( `) |
|
|
Building A/c |
Dr. |
|
20,000 |
|
|
Stock of Finished Good A/c |
Dr. |
|
5,000 |
|
|
Computer A/c |
Dr. |
|
2,000 |
|
|
To Revaluation A/c |
|
|
27,000 |
|
|
(Being Increase in value Assets transferred to Revaluation
Account) |
|
|
|
|
|
|
|
|
|
|
|
Revaluation A/c |
Dr. |
|
12,000 |
|
|
To Plant and Machinery A/c |
|
|
4,000 |
|
|
To Provision for Doubtful Debts A/c |
|
|
1,000 |
|
|
To Stock of Raw Material A/c |
|
|
2,000 |
|
|
To Workmen’s Compensation Claim A/c |
|
|
5,000 |
|
|
((Being Decrease in value of Assets and increase in
Liabilities transferred to Revaluation Account) |
|
|
|
|
|
|
|
|
|
|
|
Revaluation A/c |
Dr. |
|
15,000 |
|
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To A’s Capital A/c |
|
|
6,000 |
|
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To B’s Capital A/c |
|
|
6,000 |
|
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To C’s Capital A/c |
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|
3,000 |
|
|
((Being Revalution Profit transferred to Partners’ Capital
accounts) |
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Page No 6.58:
Question 25: Punit, Ramit and
Akshit were partners sharing profits equally. Akshit retired on 1st April,
2021. Punit and Ramit decided to continue the business and share profits in the
ratio of 3: 2. They also decided to give effect to the change in values of
assets and liabilities without changing their book values.
The book values and their revised values were as follows:
|
|
Book Values (`) |
Revised Values (`) |
|
Land |
5,50,000 |
8,50,000 |
|
Building |
2,50,000 |
2,10,000 |
|
Computers |
1,00,000 |
70,000 |
|
Computer Softwares |
5,00,000 |
4,00,000 |
|
Sundry Creditors |
70,000 |
60,000 |
|
Workmen Compensation Claim |
-
|
5,000 |
Pass an adjustment entry.
Answer:
|
|
Punit |
|
Ramit |
|
Akshit |
|
Old Ratio |
1 |
: |
1 |
: |
1 |
|
New Ratio |
3 |
: |
2 |
: |
Retired |
Punit = 1/3-3/5=5-9/15= -4/15 (Gain)
Ramit = 1/3-2/5=5-6/15= -1/15 (Gain)
Akshat = 1/3-0/5=5-0/15= 5/15 =1/3 (Sacrifice)
SHARE OF SACRIFICE FOR AKSHAT, RETIRING PARNTER
Sacrificing ratio of Akshat is 1/3
Compensating amount =1,35,,000×1/3=45,000
Share of Compensating amount by Punit and Ramit in sacrificing ratio
(4:1)
Punit= 45,000×4/5=36,000
Ramit= 45,000×1/5=9,000
An adjustment entry
|
Particulars |
Dr.
` |
Cr.
` |
|
Punit’s Capital A/c
Dr. Ronit’s Capital A/c
Dr. To Akshat’s Capital A/c |
36,000 9,000 |
45,000 |
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Chapter-6: Retirement of a partner | 2021-2022
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