WORKSHEET-RETIREMENT OF THE PARTNER

Q1)A,B and C are partners sharing profits in the ratio of 6: 5:4. Calculate new
new profit sharing ratios if (i) A retires; (ii) B retires; (ii) C retires.

Q2)X, Yand Z are partners sharing profits in the ratio of 2/3:1/4:1/12. Calculate the new ratio if X
retires.

Q3)P,Q and R are in partnership sharing profits and losses as 1/2, 2/6 and 1/6
respectively. R retires and his share is taken by P and in the ratio of 2:1.
Immediately, S is admitted for 1/4th share of profit, 1/3rd of which was given by P and the
remaining share was taken equally from P and Q. Calculate new profit-sharing ratio after S's
admission.

Q4)A, B and C are partners sharing profits in the ratio of 1/2:1/3:1/6.C retires
and A and B decide to share future profits equally. Calculate the gaining ratio.

Q5)A B and C are sharing profits in the ratio of 4:3:2. Goodwill is appearing in the books at a
value of Rs42,000. C retires and on the day of C's retirement Goodwill
is valued at 63,000. Pass the necessary journal entries.

Q6)A, B, C and D are partners in a firm sharing profits and losses in the ratio of 2:2:1:1. A and C
decided to retire from the firm. The goodwill of the firm was
valued at 90,000. B and D decided to share future profits in the ratio of 5:3.
Pass necessary journal entry for the treatment of goodwill.

Q7)A,B,C And D are partners sharing profits in the ratio of 4:3:2:2.C retires and the remaining
partners decide to share future profits in 5:3:2. On the date of C's retirement there was a debit
balance of 30,800 in the profit and loss account. Show the necessary journal entry for the
treatment of profit and loss account balance.

Q8)A,B and C are partners sharing profits and losses in the ratio of 2:2:1.A retires and the new
ratio between B and C is agreed at 3 :2.Give journal entries on A's retirement in the following
cases:
(a) Workmen Compensation Reserve appears in the books at Rs1,20,000 and there is a claim
of Rs 1,50,000 against it.

(b) Investment Fluctuation Reserve appears in the books at 40,000, when Investments (market
value 1,00,000) appear at Rs85,000.

Q9)X,Y and Z are partners in a firm sharing profits and losses equally. The
Revaluation of Assets and Liabilities
sheet of the firm as at 31st March, 2020 stood as follows:
Also identify the Assets and liabilities:
Cash in hand and Cash at Bank-86,000
Creditors-109009
Debtors-2,00,000
General Reserve-60000
Stock-1,00,000
Provident Fund-20000
Investments (at cost)-50,000
Freehold Property-4,00,000
Capital of X-3,00,000
Trade Marks-20,000
Capital of Y-2,00,000
Goodwill-33,000
Capital of Z-2,00,000
Balance sheet total-8,89,000

Z retires on 1st April, 2020 subject to the following adjustments

() Freehold Property be valued at Rs5,80,000.
(i) Investments be valued at 47,000; and stocks be valued at 794,000;
(ii) A provision of 5% be made for doubtful debts.
(iv) Trade Marks are valueless.
(v) An item of Rs12,000 included in creditors is not likely to be claimed.
(vi) Goodwill be valued at one year's purchase of the average profit of the past
three years. Profits ending 31st March were 2018 Rs1,20,000; 2019 Rs1,00,000
and 2020 Rs95,000.
Pass journal entries, give capital accounts and the balance sheet of the remaining partners.

Q10 Balance Sheet of P, Qand R who were sharing profits in proportion to their
Capitals stood as follows on 31lst March, 2016:
LIABILITIES:
Sundry Creditors-70000
Capital Accounts:
P-1,00,000
Q-1,50,000
R-100000
Current Accounts
P-20,000
Q-6,000

TOTAL-4,46,000

ASSETS:
Land and building-100000
Sundry Debtors-60000
Cash at bank-56,000
Machinery-170000
Inventory-50000
R's Current A/c-10000

Total-4,46,000

Q retired on this date and the following was agreed upon:

1) Inventory is overvalued by Rs5,000.
ii) Land and Buildings are undervalued by Rs30,000.
(ii) Machinery be depreciated by 20%.
(iv) Provision for doubtful debts be made at 5%.
v) Old credit balances of Sundry Creditors Rs5,000 be written back.
(vi) Some investments of the firm (not mentioned in the Balance Sheet) are taken
over by P for Rs35,000.
(vii) Goodwill of the firm is valued at 63,000.

P and R decided to share the future profits and losses in the ratio of 3 : 2. It was further agreed
that the amount due in his Current Account be paid in cash and the remaining balance should
be transferred to his Loan Account.
Prepare Revaluation Account, Capital and Current Accounts of the partners
(assuming all adjustments to be made through Current Accounts) and the BalanceSheet of P
and R after Q's retirement.

Q-11)Sameer,Yasmin and Saloni were partners in a firm sharing profito

lossés in the ratio of 4:3:3. On 31.3.2016, their Balance Sheet was as follow:
LIABILITIES:
Creditors-1,10,000
General reserve-60,000
Capitals:
Sameer-300000
Yasmin-250000
Saloni-150000

TOTAL-870000

ASSETS:
Stock-100000
Machinery-3,00,000
Building-200000
Cash-80000
Debtors(90000-10000 of provision)-80000
Patents-60,000
Profit and Loss Account-50000
Total-8,70,000

On the above date, Sameer retired and it was agreed that :

(i) Debtors of Rs4,000 will be written off as bad debts and a provision of 5% on
debtors for bad and doubtful debts will be maintained.
(i1) An unrecorded creditor of Rs20,000 will be recorded.
(iii) Patents will be completely written off and 5% depreciation will be charged on
stock, machinery and building.
(iv) Yasmin and Saloni will share future profits in the ratio of 3 :2.
(v) Goodwill of the firm on Sameer's retirement was valued at Rs5,40,000.

Pass necessary journal entries for the above transactions in the books of the firm
on Sameer's retirement.
(C.B.S.E. 2017. Outside Delhi)

Q12)REMENT
4.127
Lalit, Madhur and Neena were partners sharing profits as 50%, 30% and 20% respectively
.On 31st March, 2020, their Balance Sheet was as follows:

LIABILITIES:

Creditors-28000
Provident Fund-10,000
Investment Fluctuation Fund-10,000
Capital A/cs:
Lalit-50000
Madhur-40000
Neena-25000

TOTAL-1,63,000

ASSETS

Cash-34,000
Debtors(47000-provision of 3000)-44000
Stock-15000
Investment-40000
Goodwill-20,000
Profit and Loss A/c-10000

TOTAL-1,63,000

On this date, Madhur retired and Lalit and Neena agreed to continue on the
following terms
(a) The goodwill of the firm was valued at Rs51,000.
(6) There was a claim for Workmen's Compensation to the extent of R6,000.
(c) Investments were brought down to Rs15,000.
(d) Provision for bad debts was reduced by 1,000
(e) Madhur was paid R10,300 in cash and the balance was transferred to his loan
account payable in two equal installments together with interest @12% p.a.
Prepare Revaluation Account, Partners Capital Accounts and Madhur's Loan
Account till the loan is finally paid off.

Q13) P,Q and R were partners sharing profits and lOSses in the ratio
5:3:2 respectively. On 31st March, 2020 the Balance Sheet of the firm stood as follows

LIABILITIES:

Sundry Creditors-5300
Expenses outstanding-700
Reserve-3000
Capitals:
P-20000
Q-10000
R-8000

Total-47000

ASSETS:

Fixed Assets-25,000
Stock-11,000
Book Debts-9,000
Cash at Bank-2000

Total-47,000

On this date Q decided to retire and for this purpose:

(a) Goodwill was valued at 19,000;

(b) Fixed assets were valued at 30,000;
(c) Stock was considered as worth 10,000

Q was to be paid through cash, brought in by P and R, in such a way as to make

their capitals proportionate to their new profit sharing ratio which was to be P 3/5 and R 2/5.
Record these matters in the journal of the firm and prepare the resultant Balance
Sheet.
Q14)A, B and C are partners sharing profits in the proportion of 5 :3:2.A retires
rom the firm on 31st March, 2014 and you are informed that:

1)As capital on 1st April, 2013 stood at Rs5,00,000 and interest on capital is to
be allowed @ 8% p.a.

2)A has withdrawn 5,000 per month at the beginning of each month during the
year 2013-14. Interest on drawings is to be charged (@ 1270 p.a

3)A's share of profit for the year 2013-14 (after all adjustments) amounts to
75,000.

(v) Goodwill of the firm is worth 1,00,000.

B and C decide to share future profits equally. The amount due to A in excess of
Rs5,00,000 is to be paid in cash immediately on retirement and the balance due to him Is to be
paid in annual instalments of Rs2,50,000 each, interest being calculated @ 12% p.a. on the
unpaid balances. The first instalment was paid on 31st March 2015.
You are required to prepare A's Capital Account and also his Loan Account until
the payment of the whole amount due to him was made.

Q15)Anthony Baker and Clark sharing profits equally, dissolve the firm on 30 June 2015
at which date their balance sheet was as follows:

LIABILITIES:

Sundry creditors-31000
Reserve fund contingency-18000
Profit and loss account-12000
Anthony's wife loan-12000
Bank loan 12%-20000

Capital accounts:
Antony-60000
Baker-50000
Clark-20000

Current accounts
Antony-10000
Current accounts:
Baker-5000

Total-238000
ASSETS:

Bank-6300
Debtors-55000
Stock-81000
Furniture-20000
Plant-53700

Current account
Clark-22000

Total-238000

1)There is a bill for ₹ 5000 under discount. This bill was received from Ruby. To be proved
insolvent and 60% were received from his estate.

2)It was found that an investment not recorded in the books is worth ₹ 8000. This is taken over
by one of the creditors at this value.

3)Anthony agreed to accept furniture in fulfillment of his wife's loan.

4)Bank loan was repaid along with interest for nine months.

5)Assets realised as follows: debtors ₹ 24,500; stock ₹ 60,000; Plant ₹ 20,000.

Prepare the necessary accounts.