CBSE Class 12 Accountancy HOTs Retirement Of A partner Set C
1. Thomas, Biju and Sunil were partners sharing profits in the ratio of 3:2:1 with a capital balance of Rs. 1,00,000, Rs. 75,000 and Rs. 50,000. They had a joint life policy for Rs. 3,00,000. On 15.10.06 Sunil died. The company admitted for a claim of Rs. 3,60,000 on his death. The firms profit and loss had a debit balance of Rs. 60,000.
Ascertain: (a) The amount due to Sunil
(b) Pass journal entries regarding the distribution of joint life policy.
(c) Prepare capital accounts.
Soln: (a) Amount due to Sunil = Rs. 1,00,000 (See
point C)
(b) Journal entry
Joint Life Policy a/c Dr. 3,60,000
To Thomas capital a/c 1,80,000
To Biju capital a/c 1,20,000
To Sunil capital a/c 60,000
2. Aby, Suby and Minu are partners sharing profits
in the ratio of 5:3:2. Minu retired on 31.09.06. The
capital account balance and share of reserve due
to Minu together amounted to Rs. 1,80,000. But
Aby and Suby agreed to pay him Rs. 2,40,000. The
new profit sharing ratio of Aby and Suby have been
fixed at 3:2.
(i) Why has Minu been paid over and above the
actual amount due to him?
(ii) Give a journal entry to record this through capi-
tal a/c adjustments.
Soln: (i) Extra amount paid to Minu = 240000 180000 = 60,000
That amount is treated as the share of goodwill to Min
(ii) Journal entry
Abys capital a/c Dr. 30,000
Subys capital a/c Dr. 30,000
To Minus capital a/c 60,000
(Share of goodwill transferred in gaining ratio)
(ii) Calculation of Gaining ratio
Gaining ratio = New ratio Old ratio
New ratio of Aby & Suby = 3 : 2 ie 3 / 5 & 2 / 5
Old ratio of Aby, Suby & Minu = 5 : 3 : 2
ie 5 / 10 , 3 / 10 & 2 / 10
Gaining ratio of Aby = 3 / 5 - 5 / 10 = 6 - 5 / 10 = 1 / 10
Gaining ratio of Suby = 2 / 5 - 3 / 10 = 4-3 / 10 = 1 / 10
Gaining ratio = 1 : 1 ie 1 / 2: 1 / 2
3. Debee, Sedee and Nedee are in partnership, who were sharing profits in the ratio of 3 : 2:1. On 31.03.05, Nedee left the firm as per agreement. The following details are available.
On the above date Nikkil retired.
(a) The entire plant was sold for Rs. 12,000
(b) Nikkils share of goodwill was valued at Rs. 3,000
(c) General reserve to be adjusted to the extend of Nikkils share through a capital adjustment entry.
(d) Fee receivable has to be taken into a/c Rs. 5,000 which has not been brought into the books so far
Prepare: (a) Revaluation account (b) Capital accounts (c) Balance sheet
1) Adjusting entry for goodwill
Akhil capital a/c 3000 × 1 / 2 1,500
Bikhil capital a/c 3000 × 1 / 2 1,500
To Nikkil capital a/c 3,000
(ii) Adjusting entry for General Reserve
Akhils capital a/c 3000 × 1 / 2 1,500
Bikhils capital a/c 3000 × 1 / 2 1,500
Nikkils capital a/c 9000 x 1 / 3 3,000
Further information on retirement of Roy on 15th June,
2006
Profit for 3 months - Rs. 9,000
Drawings: Heisal - Rs. 1,000
Roy - Rs. 2,000
A. Gomez - Rs. 3,000
Interest on capital @ 5% p.a
Salary to Roy Rs. 300 p.m.
The firm had a fixed deposit worth Rs. 3,000 which
has not accounted so far, has to be brought into the
books. Marketable scrips were valued at Rs. 23,000.
Prepare: (a) Profit and loss appropriation a/c
(b) Capital a/c (c) Balance sheet
6. Abu, Neha and Kiran are equal partners. The led-
ger accounts as on 31.03.2006 shows the follow-
ing balances.
Expenses outstanding Rs. 3,000
Trade credit Rs. 13,000
Cash Rs. 2,000
Rent receivable Rs. 1,000
Accounts receivable Rs. 13,000
Capital
Abu - Rs. 30,000
Neha - Rs. 15,000
Kiran - Rs. 15,000
Office equipments Rs. 50,000
Stock Rs. 10,000
During the year the firm made a net profit of
Rs. 60,000 out of which the following distributions
are to be made.
Salary to Abu Rs. 4,000
Commission to Neha Rs. 2,000
Interest on capital @10% each
Kiran retired from the firm on 31.03.2006. Office
equipments are revalued at Rs. 60,000 and stock
Rs. 9,000.
Prepare:
(a) Profit and Loss appropriation a/c
(b) Revaluation a/c (c) Capital accounts
(d) Balance sheet
