NCERT Solutions for Class 12 Accountancy Chapter 4 Reconstitution of a Partnership Firm – Retirement/Death of a Partner
Question 1. Anita, Jaya and Nisha are partners sharing profits and losses in the ratio of 1:1:1 Jaya retires from the firm. Anita and Nisha decided to share the profit in future in the ratio 4 :3. Calculate the gaining ratio.
Question 2. Azad, Vijay and Amit are partners sharing profits and losses in the proportion of 1/4,1/8,10/16 and Calculate the new profit sharing ratio between continuing partners if (a) Azad retires; (b) Vijay retires; (c) Amit retires.
Question 3. Calculate the gaining ratio in each of the above situations.
Question 4.Anu, Prabha and Milli are partners. Anu retires. Calculate the future profit sharing ratio of continuing partners and gaining ratio if they agree to acquire her share : (a) in the ratio of 5:3; (b) equally.
Question 5. Rahul, Robin and Rajesh are partners sharing profits in the ratio of 3 : 2 : 1. Calculate the new profit sharing ratio of the remaining partners if (i) Rahul retires; (ii) Robin retires; (iii) Rajesh retires.
Question 6.Puja, Priya, Pratistha are partners sharing profits and losses in the ratio of 5 : 3 : 2. Priya retires. Her share is taken by Priya and Pratistha in the ratio of 2 : 1. Calculate the new profit sharing ratio.
Question 7.Ashok, Anil and Ajay are partners sharing profits and losses in the ratio of 1/2, 3/10 and 1/5. . Anil retires from the firm. Ashok and Ajay decide to share future profits and losses in the ratio of 3 : 2. Calculate the gaining ratio.
TEST YOUR UNDERSTANDING I
Question 2. The old profit sharing ratio among Rajender, Satish and Tejpal were 2:2:1. The new profit sharing ratio after Satish’s retirement is 3:2. The gaining ratio is
Question 3. Anand, Bahadur and Chander are partners. Sharing Profit equally on Chander’s retirement, his share is acquired by Anand and Bahadur in the ratio of 3 : 2. The new profit sharing ratio between Anand and Bahadur will be
Question 4. In the absence of any information regarding the acquisition of share in profit of the retiring/deceased partner by the remaining partners, it is assumed that they acquire his/her share
TEST YOUR UNDERSTANDING II
• Choose the correct option in the following questions
Question 2. Gobind, Hari and Pratap are partners. On retirement of Gobind, the goodwill already appears in the Balance Sheet at T 24,000. The goodwill will be written off
Question 3.Chaman, Raman and Suman are partners sharing profits in the ratio of 5:3:2. Raman retires, the new profit sharing ratio between Chaman and Suman will be 1:1. The goodwill of the firm is valued at Rs. 1,00,000 Raman’s share of goodwill will be adjusted
Question 4. On retirement/death of a partner, the remaining partner(s) who have gained
Answer (b) Remaining partners (who have sacrificed) as well as partners
DO IT YOURSELF II
On the date of retirement, the following adjustments were to be made
Do it yourself III
Question 1. The Balance Sheet of A, B and C who were sharing the profits in proportion to their capitals stood as on March 31, 2007.
B retired on the date of Balance Sheet and the following adjustments were to be made
Question 2. R, S and M were carrying on business in partnership
Shyam retired on the above mentioned date on the following terms
Do it Yourself IV
The partnership deed provides that the profit be shared in the ratio of 2:1:1 and that in the event of death of a partner, his executors be entitled to be paid out
Rakesh died on April 1, 2007. He had withdrawn Rs. 5,000 to the date of his death. The investment were sold at par and R’s Executors were paid off. Prepare Rakesh’s Capital Account that of his executors.
Short Answer Type Questions
Question 1. What are the different ways in which a partner can retire from the firm?
Question 2. Write the various matters that need adjustments at the time of retirement of partners.
Question 3. Distinguish between sacrificing ratio and gaining ratio.
Question 4. Why do firm revaluate assets and reassess their liabilities on retirement or on the event of death of a partner?
Question 5. Why a retiring/deceased partner is entitled to a share of goodwill of the firm?
Long Answer Type Questions
(ii) Opening the Loan Account Sometimes the amount due to the retiring partner is paid in instalments then the balancing figure of his/her capital account is transferred to his/her loan account, in this case, the retiring partner receives equal instalments along with the interest on the amount outstanding. In that case the following journal entries will be passed for transferring the amount paid to him/her in retiring partner’s loan account.
(iii)Some Payment in Cash and Some in Instalment Sometimes the amount due to the retiring partner is paid partly in cash and partly in equal instalments in that case a certain amount is paid in cash to the retiring partner and the rest amount due to him/her is transferred to his/her loan account. The following necessary journal entry is to be passed.
Question 2. How will you compute the amount payable to a deceased partner?
Note: In the above capital account, the legal executor will be entitled for the balancing
Question 3. Explain the treatment of goodwill at the time of retirement or on the event of death of a partner.
Step 2 Adjusting Goodwill Through Partners’ Capital Account
Question 4. Discuss the various methods of computing the share in profits in the event of death of a partner.
Example A, B, C and D are equal partners. The profit of the firm for the years 2009, 2010 and 2011 are ? 5,00,000, ? 7,00.000 and <9,00,000 respectively. C dies on June 30, 2012. The share of C in the firm’s profit will be calculated on the basis of average profit of last three years. Firm closes its books every year on December 31.
(ii) On the Basis of Sale
Example A, B and C are equal partners. The last year’s sales and profit were ? 40,00,000 and ? 4,00,000. C died on June, 2012. Sales of the current year till the date of C’s death amounts to ? 15,00,000. Firm closes its books on December 31 every year.
Question 1. Aparna, Manisha and Sonia are partners sharing profits in the ratio of 3 : 2 :1. Manisha retires and goodwill of the firm is valued at Rs. 1,80,000. Aparna and Sonia decided to share future profits in the ratio of 3 : 2. Pass necessary journal entries.
Question 2. Sangeeta, Saroj and Shanti are partners sharing profits in the ratio of 2 : 3 : 5. Goodwill is appearing in the books at a value of Rs. 60,000. Sangeeta retires and goodwill is valued at Rs. 90,000. Saroj and Shanti decided to share future profits equally. Record necessary journal entries.
Question 3. Himanshu, Gagan and Naman are partners sharing profits and losses in the ratio of 3 : 2 :1 On March 31, 2007, Naman retires. The various assets and liabilities of the firm on the date were as follows Cash Rs.10,000, Building Rs. 1,00,000, Plant and Machinery Rs. 40,000, Stock Rs. 20,000, Debtors Rs. 20,000 and Investments Rs. 30,000.
Question 4. Naresh, Raj Kumar and Bishwajeet are equal partners. Raj Kumar decides to retire. On the date of his retirement, the Balance Sheet of the firm showed the following : General Reserves Rs.36,000 and Profit and Loss Account (Dr) Rs. 15,000.
Question 5. Digvijay, Brijesh and Parakaram were partners in a firm sharing profits in the ratio of 2 : 2 : L Their Balance Sheet as on March 31, 2007 was as follows
6. Radha, Sheela and Meena were in partnership sharing profits and losses in
7. Pankaj, Naresh and Saurabh are partners sharing profits in the ratio of 3 : 2 :
8. Puneet, Pankaj and Pammy are partners in a business sharing profits and
Question 9. Following is the Balance Sheet of Prateek, Rockey and Kushal as on March 31, 2007.
10. Narang, Suri and Bajaj are partners in a firm sharing profits and losses in
11. The Balance Sheet of Rajesh, Pramod and Nishant who were sharing profits in
12. Following is the Balance Sheet of Jain, Gupta and Malik as on March 31, 2002.
13. Arti, Bharti and Seema are partners sharing profits in the proportion of 3:2:1
14. Nithya, Sathya and Mithya were partners sharing profits and losses in the