(Retirement of Partner) | Aster Classes

Shah, Lodha, and Dhole were partners sharing profits and losses in the ratio of 4:3:3. Their Balance Sheet as on 31st March 2019 is a given below. Practical Problems | Q 5 | Page 186 Retirement of Partner.

Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board 

Chapter 4 Reconstitution of Partnership (Retirement of Partner) Practical Problems [Pages 183 – 186]

Practical Problems | Q 5 | Page 186

Shah, Lodha, and Dhole were partners sharing profits and losses in the ratio of 4:3:3. Their Balance Sheet as on 31st March 2019 is a given below.

2. Computers to be depreciated by 10%

3. Furniture to be revalued at ₹ 27,500

4. Vehicles appreciated by 20%

5. R.D.D. was no longer necessary

6. Shah and Dhole will share the future profits and losses in the ratio of 2:1

7. It was decided that goodwill should not appear in the books of a new firm and amount payable to Lodha is to be transferred to his Loan A/c

Prepare :

Profit and Loss adjustment A/c,

Partners capital accounts,

Balance sheet of new firm

Solution


Rohan, Rohit, and Sachin are partners in a firm sharing profit and losses in the proportion 3:1:1 respectively. Their balance sheet as on 31st March 2018 is as shown below Practical Problems | Q 4 | Page 185 Retirement of partner

Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board 

Chapter 4 Reconstitution of Partnership (Retirement of Partner) Practical Problems [Pages 183 – 186]

Practical Problems | Q 4 | Page 185

Rohan, Rohit, and Sachin are partners in a firm sharing profit and losses in the proportion 3:1:1 respectively. Their balance sheet as on 31st March 2018 is as shown below.

On 1st April 2018, Sachin retired and the following adjustments have been agreed upon.

1. Goodwill was revalued at ₹ 50,000

2. Assets and Liabilities were revalued as follows. Debtors ₹ 50,000, Live Stock, ₹ 45,000; Building ₹ 1,25000, Plant and Machinery ₹ 30,000, Motor Truck ₹ 95,000 and Creditors ₹ 30,000

3. Rohan and Rohit contributed additional capital through Net Banking of ₹ 50,000 and ₹ 25,000 respectively.


4. Balance of Sachin’s Capital Account is transferred to his Loan Account

Give Journal entries in the books of new firm.

Solution


The Balance Sheet of the Anu, Renu, and Dinu is as follows, the partners are sharing profits and losses in the proportion of 2:2:1 respectively. Practical Problems | Q 3 | Page 184 Retirement of Partner

Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board 

Chapter 4 Reconstitution of Partnership (Retirement of Partner) Practical Problems [Pages 183 – 186]

Practical Problems | Q 3 | Page 184

The Balance Sheet of the Anu, Renu, and Dinu is as follows, the partners are sharing profits and losses in the proportion of 2:2:1 respectively.

Dinu retires from the firms on 1st April 2019 on the following terms.

1. The assets are to be revalued as freehold property  ₹ 30,000, Machinery  ₹ 5000, Furniture ₹ 12000, All debtors are good.


2. Goodwill of the firm is valued at thrice the average profit for the preceding five years. Profits of the firm for the year.

2014-15₹ 1,000
2015-16₹ 10,500
2016-17₹ 10,000
2017-18₹ 16,000
2018-19₹ 10,000

3. Dinu should be paid ₹ 3,000 by cheque

4. The Balance of Dinu’s capital A/c should be kept in the business as a loan.

Prepare:

Profit and loss adjustment A/c,

Capital Accounts of partners,

Balance Sheet of the new firm

Solution


The Balance Sheet of Ram, Shyam, and Ghanshyam sharing profits and losses 3:2:1 respectively. Their position on 31-3-2019 were as follows Practical Problems | Q 2 | Page 184 Retirement of Partner

Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board 

Chapter 4 Reconstitution of Partnership (Retirement of Partner) Practical Problems [Pages 183 – 186]

Practical Problems | Q 2 | Page 184

The Balance Sheet of Ram, Shyam, and Ghanshyam sharing profits and losses 3:2:1 respectively. Their position on 31-3-2019 were as follows.

Ghanshyam retired on 1st April 2019 on the following terms.

1. Building and Investment to be appreciated by 5% and 10% respectively.

2. Provision for Doubtful Debts to be created at 5% on Debtors.


3. The provision of ₹ 3,000 be made in respect of Outstanding Salary.

4. Goodwill of the firm is valued at  ₹ 90,000 and partners decide that goodwill should be written back.

5. The amount payable to the Retiring partner be transferred to his Loan A/c.

Prepare :

Profit and Loss Adjustment A/c,

Partners Capital A/c,

Balance Sheet of New Firm.

Solution

Working Notes :

(1) Provision of ₹ 3,000 for outstanding salary is recorded on debit side of Profit and Loss Adjustment A/c and then on the Liability side of Balance Sheet.

(2) Goodwill of the firm is valued at ₹ 90,000 and share of retiring partner in it is ₹ 15,000 (1/6th part) and it is to be written back means it is to be shared by remaining partners in their profit-loss ratio.


Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, HSC, Maharashtra, State, Board,

State whether the following statement is true or false with reasons.

Gain ratio means New ratio minus Old ratio.- True

Explanation: As per definition, the profit-sharing ratio which is acquired by the continuing partners from the retiring partner is called gain ratio. If the gain ratio added to the old ratio we will get New ratio. It means New ratio = Old ratio + Gain ratio by interchanging the terms, we will get Gain ratio = New ratio – Old ratio.

Retiring partner’s share in profit up to the date of his retirement will be debited to Profit and Loss Suspense Account. – True

Explanation: If a partner retires from the firm during the accounting year, the profit or loss for the period from the date of last balance sheet to the date of retirement is calculated on the basis of last year’s profit or average profit and it is credited to retiring partner’s capital A/c and for time being it debited to a new account called Profit and Loss Expense A/c. This is because final accounts cannot be prepared on any date during the accounting year.

On the retirement of a partner, a sacrifice ratio is considered. – False

Explanation: On the retirement of a partner, his share is acquired by continuing partners in a certain proportion and it is nothing but a gain for them. Therefore, on the retirement of a partner instead of sacrifice ratio gain ratio is considered.

Retiring partner is called an outgoing partner. – True 
Explanation: When a person retires from the firm due to health issues, financial issues, or personal reasons then it is known as a person retires from the business, and for the business, he is an outgoing partner.
On retirement of a partner, remaining partner will share the goodwill in their profit sharing ratio. – False
Explanation. On the retirement of a partner, after giving retiring. partner’s share in goodwill and if goodwill is written off, then remaining partners will adjust the goodwill in their new profit sharing ratio. (If raised to full extent and written off)
Retiring partner is not entitled to share in general reserve and accumulated profit. – False
Explanation: General reserve and accumulated profit are created out of past undistributed profit, such profits are the outcome of hard work of all the partners including retiring partners. Hence, retiring partner’s has the right to share general reserve and accumulated profit. He is, therefore, entitled to get a share in general reserve and accumulated profit.

Chapter 4, Reconstitution of Partnership, (Retirement of Partner), Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, HSC, Maharashtra, State, Board,

Write the Word/ Term/ Phrase which can substitute of the following statement

Credit balance of Profit and Loss Adjustment Account. – Profit on revaluation Accounts.

The ratio in which the continuing partners are benefited due to the retirement of the partner. – Gain Ratio.

Debit balance of revaluation Account. – Loss on revaluation.

The ratio which is obtained by deducting the Old Ratio from New Ratio. – Gain Ratio

Money value of business reputation earned by the firm over a number of years. – Goodwill.

Partner’s Account where Loss or Profit on revaluation is transferred. – Capital/Current Account.


Chapter 4, Reconstitution of Partnership, (Retirement of Partner), Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, HSC, Maharashtra, State, Board,

Select the most appropriate alternative from those given below and rewrite the sentence.

The Profit or Loss from revaluation on the retirement of a partner is shared by ______.

The remaining partners

All the partners

Only retiring partner

Bank

Decrease in the value of assets should be __________to profit and Loss Adjustment Account.

Debited

Credited

Added

Equal

The balance of the capital account of retired partner is transferred to his _________ account if it is not paid.

Loan

Personal

Current

Son’s

Gain ratio _______ Ratio less Old Ratio Gain Ratio _____ Ratio less Old Ratio.

New

Equal

Capital

Sacrifice

New Ratio = Old Ratio + _____ Ratio

Gain

Capital

Sacrifice

Current

Apte, Bhate and Chitale are sharing 1/2, 3/10, and 1/5 if Apte retire their new ratio will be ______ .

5: 2

3: 2

5: 3

2: 5


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