RETIREMENT OF A PARTNER

1 Anu, Bina and Roy were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Roy 1
retired and his share was acquired by Anu. The new profit sharing ratio between Anu and Bina
after Roy’s retirement will be :
(A) 3 : 2 (B) 3 : 1 (C) 1 : 1 (D) 2 : 1

2 Asha, Yug and Zubin were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2. 1
Zubin retired. Zubin’s share was acquired equally by Asha and Yug. The new profit sharing ratio
between Asha and Yug after Zubin’s retirement was : 1
(A) 3 : 2 (B) 5 : 4 (C) 4 : 3 (D) 2 : 1

3 Falak, Girdhar and Hemang were partners in a firm sharing profits and losses in the ratio of 6 : 3 : 3
1. Girdhar retired. Falak and Hemang decided to share profits in future in the ratio of 3 : 2. On
the day of Girdhar’s retirement, goodwill of the firm was valued at ₹ 1,00,000.
Calculate gaining ratio and pass necessary journal entry to record the treatment of
goodwill on Girdhar’s retirement.
4 Geeta, Seeta and Meeta were partners a firm sharing profits and losses in the ratio of 2:2:1. On 3
31st March, 2022, Meeta retired from the firm. On Meeta’s retirement the goodwill of the firm
was valued at 3 years’ purchase of average profits of the last 5 years. The profits of the last 5
years were:
2017-2018 70,000 2018-2019 80,000 2019-2020 90,000
2020-2021 1,00,000 2021-2022 1,10,000
Calculate Meeta’s share of Goodwill and pass necessary journal entry for the same without
opening goodwill account.
5 Anshul, Babita and Chander were partners in a firm running a successful business of car 3
accessories. They had agreed to share profits and losses in the ratio of 1/2 : 1/3 : 1/6
respectively. After running business successfully and without any disputes for 10 years, Babita
decided to retire due to old age and the Anshul and Chander decided to share future profits and
losses in the ratio of 3 : 2. The accountant passed the following journal entry for Babita share of
goodwill and missed some information. Fill in the missing figures in the following Journal entry
and calculate the gaining ratio.

Anshul’s Capital A/c Dr …………

Chander’s Capital A/c Dr 21,000
To Babita’s Capital A/c …………..
(Chander’s share of Goodwill debited to amounts of continuing partners in their gaining ratio)
6 X, Y and Z were partners in a firm sharing profits in the ratio of ½, 1/3 and 1/6 irrespectively. Z 1
decided to retire from the firm. On the date of his retirement, Workmen Compensation Reserve
of ₹1,20,000 was appearing in the balance sheet of the firm. The claim on account of workmen
compensation was determined at ₹67,500. Excess of claim amount over the reserve will be
(a) Debited to revaluation account (b) Credited to revaluation account.
(c) Debited to partner’s capital account . (d) Credited to partner’s capital account

7 Gaurav, Sonu and Anita are partners in a firm sharing profits in the ratio of 4 : 3 : 2. Sonu retires 3
and the balance in his capital account after making necessary adjustments on account of
reserves, revaluation of assets and re-assessment of liabilities is ₹4,00,000. Gaurav and Anita
agreed to pay him 4,60,000 in full settlement of his claim. Sonu’s share of goodwill of the firm, on
his retirement is:
(a) ₹20,000 (b) ₹60,000 (c) ₹1,80,000 (d) ₹1,20,000
8 Gurpreet, Vishal and Ananya are partners in a firm sharing profits in the ratio of 2 : 3 : 1. Vishal 3
retires and the balance in his capital account after making necessary adjustments on account of
reserves, revaluation of assets and re-assessment of liabilities is ₹1,20,000. Gurpreet and Ananya
agreed to pay him ₹1,80,000 in full settlement of his claim. Vishal’s share of Goodwill of the firm,
on his retirement is:
(a) ₹1,20,000 (b) ₹60,000 (c) ₹30,000 (d) ₹15,000
9 Inder, Johnny and Kapil were in partnership sharing profits and losses in the ratio 9:3:4 On 31 st 6
March 2023 their Balance Sheet was as follows:

Liabilities Rs. Assets Rs.

Sundry Creditors 10,000 Cash at bank 1,15,000
Capital Accounts Stock 60,000
Inder 90,000 Sundry Debtors 1,00,000
Johnny 75,000
Kapil 60,000 2,25,000 Fixed Assets 1,20,000
General Reserve 80,000
Workmen Compensation Reserve 1,60,000 Profit & Loss A/C 80,000
4,75,000 4,75,000
Kapil retired from the firm on 31st March, 2023 on the following terms :
(i) Bad Debts amounting to < 5,000 were to be written off.
(ii) Fixed Assets were revalued at < 96,000. (iii) Stock was undervalued by < 29,000.
(iv) Creditors were paid off.
(V) Liability on account of workmen compensation determined at 2,00,000.
(v) Goodwill of the firm was valued at 80,000 share of goodwill was to be adjusted in the
accounts of Inder and Jonny.
(vi) New profit sharing ratio between Inder and Jonny was 3 : 2.
Pass the necessary journal entries in the books of the firm on Kapil’s retirement.
10 6
Ravi, Tanu and Sara were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. Ravi
retired from the firm due to his illness on 31st March, 2023.
Balance Sheet of Ravi, Tanu and Sara as at 31st March, 2023
Liabilities Rs. Assets Rs.
Sundry Creditors 1,00,000 Cash at bank 30,000
Capital Accounts Stock 1,60,000
Ravi 80,000 Sundry Debtors 2,00,000
Tanu 1,24,000
Sara 66,000 270,000 Fixed Assets 1,20,000
Profit & Loss 1,70,000
Employees Provident Fund 20,000
5,60,000 5,60,000
Additional Information :
(i) Creditors included a sum of < 4,000 which was not likely to be claimed.
(ii) A provision of 5% for doubtful debts was to be created on debtors.
(iii) Goodwill of the firm was valued at < 1,60,000.
(iv) Fixed Assets were found overvalued by < 5,000.
(v) New profit sharing ratio of Tanu and Sara was agreed at 2 : 3.
(vi) The amount due to Ravi was transferred to his loan account.
Prepare Revaluation Account and Partner Capital Account.
11 Trisha Urvi & Varsha, were in partnership sharing profits and losses in the ratio 5:4:1. On 31 st 6
March 2023 their Balance Sheet was as follows:

Liabilities Rs. Assets Rs.

Sundry Creditors 2,70,000 Cash at bank 2,00,000
Capital Accounts Stock 1,00,000
Trisha 200,000 Sundry Debtors 1,50,000
Urvi 130,000 Fixed Assets 4,00,000
Varsha 1,00,000 4,30,000
General Reserve 1,50,000
8,50,000 8,50,000
Trisha retired on 1st April, 2023 and the partners agreed to the following terms :
(i) Fixed Assets were found overvalued by ₹ 80,000.
(ii) Stock was taken over by Trisha at 80,000.
(iii) Goodwill of the firm was valued at 1,00,000 on Trisha’s retirement and Trisha’s share by
goodwill was adjusted through the Capital Accounts of remaining partners.
(iv) New profit sharing ratio between the remaining partners was agreed at 2 : 3.
(v) Trisha was paid ₹ 50,000 on retirement and the balance was transferred to her loan A/C
Pass necessary journal entries in the books of the firm on Trisha’s retirement.
12 Prina, Qadir and Kian were in partnership sharing profits and losses in the ratio 7:2:1. On 31 st 6
March 2023 their Balance Sheet was as follows:

Liabilities Rs. Assets Rs.

Sundry Creditors 3,60,000 Cash at bank 2,10,000
Capital Accounts Stock 6,60,000
Prina 9,60,000 Sundry Debtors 6,00,000
Qadir 8,40,000 (-) Provision (30,000) 6,20,000
Kian 9,00,000 27,00,000 Furniture 3,60,000
Workmen Compensation 5,40,000 Building 9.00,000
Reserve
General Reserve 3,00,000 Land 12,00,000
39,00,000 39,00,000
Chavi retired on 1st April, 2023 and the partners agreed to the following terms:-
a) Land appreciated by 30% and Building depreciated by 3,54,000.
b) Provision for Bad Debts to be maintained at 6%.
c) Goodwill of the firm valued at 12,00,000
d) Liability on account of workmen compensation determined at 1,40,00.
e) Qadir’s amount to be transferred to his loan account.
f) Total Capital of the firm valued at 16,00,000 which will be adjusted according to the new
profit sharing ratio by opening current account.
Prepare Revaluation Account and Partner Capital Account.
13 Arnav, Bhavi and Chavi were in partnership sharing profits and losses in the ratio 3:2:1. 6
Liabilities Rs. Assets Rs.
Sundry Creditors 2,50,000 Cash at bank 1,30,000
Capital Accounts Plant & Machinery 3,00,000
Arnav 1,80,000 Sundry Debtors 3,50,000
Bhavi 1,60,000 (-) Provision (20,000) 3,30,000
Chavi 1,00,000 Furniture 20,000
Workmen Compensation 1,20,000 Profit & Loss A/C 30,000
Reserve
8,10,000 8,10,000
 Qadir retired and the partners agreed to the following terms:-
1. Plant & Machinery to be valued at 4,40,000.
2. Provision for Bad Debts to be increased by 50%.
3. Chavi’s share of Goodwill valued at 80,000 to be adjusted through capital account of
gaining partners.
4. Total amount to be paid to Chavi by cash brought in by Arnav and Bhavi in such a way so
as to make their capitals in proportion to new profit sharing ratio.
Prepare Revaluation Account and Partner Capital Account.
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15 Bat, Cat and Rat were partners sharing profits and losses in the ratio 5:3:2. Cat retired and on 3
that date there was a balance of Investment of ₹ 4,00,000 and Investment Fluctuation Reserve
of ₹ 1,00,000 was appearing in the balance sheet.
Pass necessary journal entries for Investment Fluctuation reserve in the following cases.
i Market Value of Investments was ₹ 4,80,000.
ii Market Value of Investments was ₹ 3,80,000.
iii Market Value of Investments was ₹ 2,90,000
16 Rohan, Piyush and Suman were partners in a firm sharing profits and losses in the ratio of
3 : 2 : 2. Piyush retired. The new profit sharing ratio between Rohan and Suman after Piyush’s
retirement was 4 : 3. The gaining ratio of remaining partners will be : 1
(A) 2 : 1 (B) 3 : 2 (C) 4 : 3 (D) 1 : 1
17 A, B and C were partners in a firm sharing profits and losses in the ratio of 2 : 3 : 1. Goodwill
appeared in their books at ₹ 3,00,000. B retired from the firm on 1st April, 2024. On that date,
the goodwill of the firm was valued at ₹ 5,40,000. Pass the necessary Journal entries in the books
of the firm for the treatment of goodwill on B’s retirement.
18 Lalit, Madhur and Neel were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1.
Neel retired and his capital after making the necessary adjustments on account of reserves and
revaluation of assets and liabilities was ₹ 10,00,000. Lalit and Madhur agreed to pay Neel
₹ 22,00,000 in full settlement of his claim. Pass necessary journal entries for the treatment of
goodwill and making final payment to Neel.
19 Sia, Manav and Ajay were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. On
31st March, 2024, their Balance Sheet was as follows

On 31st March, 2024, Manav retired from the firm and the remaining partners decided to carry
on the business. The assets and liabilities were revalued which resulted into a gain of ₹ 1,20,000
because of the increase in the value of Land and Building by the same amount.
(i) 40% of Land and Building were taken by retiring partner at revalued value.
(ii) Goodwill of the firm be valued at ₹ 4,00,000. Sia and Ajay decided to share future profits and
losses in the ratio of 3 : 2.
(iii) The total capital of the new firm will be ₹ 20,00,000 which will be in proportion of the new
profit sharing ratio of Sia and Ajay. For this, necessary cash was brought in or was paid off to the
partners, as the case may be. Prepare Partners’ Capital Accounts.
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22 Diya, Esha and Fila were partners in a firm sharing profits and losses in the ratio of 4 : 5 : 1. Fila
retired. Diya and Esha decided to share profits in future in the ratio of 3 अ 7. On the day of Fila’s
retirement, goodwill of the firm was valued at ₹ 3,00,000.
Calculate gaining ratio and pass necessary journal entry to record the treatment of goodwill
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