12th | Ts grewal 2022-2023 Question 36 to 40 | Retirement of A Partner

Question 36:


Pankaj, Naresh and Saurabh are partners sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2022, Naresh retired on that date, Balance Sheet of the firm was as follows:
 

Liabilities

 ( `)

Assets

 ( `)

General Reserve

12,000

Bank

7,600

Sundry Creditors

15,000

Debtors

6,000

 

Bills Payable

12,000

Less: Provision for Doubtful Debts

400

5,600

Outstanding Salary

2,200

Stock

 

9,000

Provision for Legal Damages

6,000

Furniture

 

41,000

Capital A/cs:

 

Premises

 

80,000

Pankaj

46,000

 

 

 

Naresh

30,000

 

 

 

Saurabh

20,000

96,000

 

 

 

 

 

 

 

 

1,43,200

 

1,43,200

 

 

 

 

 
Additional Information:
(a) Premises have appreciated by 20%, stock depreciated by 10% and provision for doubtful debts was to be made 5% on debtors. Further, provision for legal damages is to be made for  ` 1,200 and furniture to be brought up to  ` 45,000. 
(b) Goodwill of the firm be valued at  ` 42,000.
(c)  ` 26,000 from Naresh's Capital Account be transferred to his Loan Account and balance be paid through bank: if required, necessary loan may be obtained from bank.
(d) New profit-sharing ratio of Pankaj and Saurabh is decided to be 5 : 1.
Give the necessary Ledger Accounts and Balance Sheet of the firm after Naresh's retirement. (NCERT Modified)

 

Answer:


Revaluation Account

Dr.

Cr.

Particulars

 ( `)

Particulars

 ( `)

Stock

900

Premises

16,000

Provision for Legal Damages

1,200

Provision for Doubtful Debts

100

Revaluation Profit

 

Furniture

4,000

Pankaj’s Capital A/c

9,000

 

 

 

Naresh’s Capital A/c

6,000

 

 

 

Saurabh’s Capital A/c

3,000

18,000

 

 

 

20,100

 

20,100

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Pankaj

Naresh

Saurabh

Particulars

Pankaj

Naresh

Saurabh

Naresh’s Capital A/c

14,000

-

-

Balance b/d

46,000

30,000

20,000

Naresh’s Loan A/c

-

26,000

-

General Reserve

6,000

4,000

2,000

Bank

-

28,000

-

Revaluation (Profit)

9,000

6,000

3,000

Balance c/d

47,000

 -

25,000

Pankaj’s Capital A/c

-

14,000

-

 

61,000

54,000

25,000

 

61,000

54,000

25,000

 

 

 

 

 

 

 

 

 

Bank Account

  Dr.

Cr.

Particulars

 ( `)

Particulars

 ( `)

Balance b/d

7,600

Naresh’s Capital A/c

28,000

Bank Loan (Balancing Figure)

20,400

 

 

 

28,000

 

28,000

 

 

 

 

 

Balance Sheet

as on March 31, 2022

Liabilities

 ( `)

Assets

 ( `)

Sundry Creditors

15,000

Debtors

6,000

 

Bills Payable

12,000

 Less: Provision for Doubtful Debts

300

5,700

Bank Loan

20,400

Stock

8,100

Outstanding Salaries

2,200

Furniture

45,000

Provision for Legal Damages

7,200

Premises

96,000

Naresh’s Loan

26,000

 

 

Capitals:

 

 

 

Pankaj

47,000

 

 

 

Saurabh

25,000

72,000

 

 

 

1,54,800

 

1,54,800

 

 

 

 

 

         
                                             

Question 37:


A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 3. Their Balance Sheet as at 31st March, 2022 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, 2022, 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
(28,000 × 10%)

2,800

Stock
(20,000 × 10%)

2,000

Electronic Typewriter
(8,000 × 10%)

800

Land and Building
(36,000 × 10%)

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, 2022 (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 38:


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, 2022 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, 2022 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

 ( `)

2022

 

 

 

 

 

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, 2022 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

Amout 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 39:


Ashok, Bhaskar and Chaman were in partnership sharing profits and losses equally. ‘Chaman' retires from the firm. After adjustments, his Capital Account shows a credit balance of  ` 3,00,000 as on 1st April, 2019. Balance due to 'Chaman' is to be paid in three equal annual instalments along with interest @ 10% p.a. Prepare Chaman's Loan Account until he is paid the amount due to him. The firm closes its books on 31st March every year.

 

Answer:


Dr.

Chaman’s Loan A/c

Cr.

Date

Particulars

 ( `)

Date

Particulars

 ( `)

2020

 

 

2019

 

 

March 31

To Bank A/c

(1,00,000 + 30,000)

1,30,000

April 01

By Chaman’s Capital A/c

3,00,000

March 31

To balance c/d

2,00,000

2020

 

 

 

 

 

March 31

By Interest on Loan A/c

30,000

 

 

 

 

(3,00,000 × 10/100)

 

 

 

3,30,000

 

 

3,30,000

2021

 

 

2020

 

 

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

2021

 

 

 

 

 

March 31

By Interest on Loan A/c

20,000

 

 

 

 

(2,00,000 × 10/100)

 

 

 

2,20,000

 

 

2,20,000

2022

 

 

2021

 

 

March 31

To Bank A/c (1,00,000 + 10,000)

1,10,000

April 01

By balance b/d

1,00,000

 

 

 

2022

 

 

 

 

 

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 40:


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

 

 

 

 

 

 

 

Click on Below link for more questions Of Volume-1 of 12th

Chapter-6: Retirement of a partner | 2022-2023

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