CHAPER 05 REIREMEN OF A PARNER Question 5:1 he Balance Sheet of Amar, Akber and Anthoni who where sharing profit in the ratio of 4:3:2 stood as following on 31st December 2004. Balance Sheet as on 31st December 2004 Liabilities Amount Assets Amount Creditors 19,000 25,000 Provident Fund 12,500 Cash at Bank 2,500 General Reserve 4,500 Debtors 15,500 Capital: Advertising Expenditure A/c 9,000 Amar 40,000 Plant & Machinery 34,000 Akber 30,000 Building 45,000 Anthoni 25,000 95,000 OAL 1,31,000 OAL 1,31,000 Akber retired on the above date on the following terms : (i) he assets and liabilities need not be revalued. (ii) 20% of general reserve is kept for provision for doubtful debts (iii) he Goodwill of the entire firm be fixed at Rs. 10,800 and Akber s share of the same be adjusted into the accounts of Amar and Anthoni who are to share the profits in future in the ratio of 5: 3. (iv) he entire capital of the new firm be fixed at Rs. 56,000 and the capitals of Amar and Anthoni to be proportionate to their new profit sharing ratio and also they have decided to pay Akbar immediately by the money brought by Amar and Anthoni in their profit sharing ratio after leaving a sum of Rs.5000 as cash balance for the working capital requirement. For this purpose actual cash is to be brought in or paid off. Prepare : (a) he Capital Accounts of Amar and Anthoni after the retirement of Akber. (b) he Balance Sheet of Amar and Anthoni after the retirement of Akber. Question 5:2 (SP 2017)
(A) Mohit and Keshav are two partners sharing profits and losses equally. he Balance Sheet of their firm as at 31 st March, 2016, was as follows: Liabilities Amount ( ) Assets Amount ( ) Creditors 12,330 Cash in hand 13,000 General Reserve 2,000 Book Debts 10,200 Capital Closing 6,730 Mohit 19,030 Building 19,300 Keshav 18,870 37,900 Goodwill 3,000 52,230 52,230 Keshav retires on 1 st April, 2016 on which date: (i) he Goodwill of the firm was valued at 9,000. (ii) 20% of the General Reserve was kept aside as provision for doubtful debts. (iii) here was a piece of furniture valued at 2,060 which was unrecorded in the books of the firm. Mohit decided to pay off Keshav by giving him this piece of furniture and the balance in annual installments of 8,000 along with interest @ 5 % per annum. You are required to prepare: (a) (b) Keshav s Capital Account. Keshav s Loan Account till it is finally closed. Question 5:3
A, B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1. On 31.3.10, B decides to retire and their capital accounts on that date are A Rs. 60,000; B Rs. 45,000 and C Rs. 50,000. heir current accounts on that date are A Rs. 5,000 (CR); B Rs. 2,300 (DR) and C Rs. 3,000 (CR). he partnership deed provided that, in case of retirement, the retiring partner should be entitled to a share of the goodwill of the firm to be calculated on the average of the profits of last three years ending on 31.3.2010 which comes to Rs. 12,000 and that the payment of the total interest of the retiring partner will be made by annual instalments of Rs. each. he retiring partner will be entitled to interest also at 6% on the unpaid balance. he first instalment was paid on 31.3.2010. Show B s loan account until the whole payment due to him is made. Question 5:4 Following is the balance sheet of A, B and C as on 31 st March 2016. hey share profit and losses in the ratio 5:3:2 respectively. LIABILIIES Capitals: A 4,00,000 B 3,00,000 C 1,20,000 Bank loan C s loan Workmen compensation fund Balance sheet as on 31 st March, 2016 8,20,000 1,00,000 90,000 ASSES Land and building Furniture Bills receivable Debtors Investments Cash at bank Vehicles Advertisement suspense 4,50,000 90,000 70,000 90,000 40,000 80,000 80,000 95,000 25,000 OAL 10,20,000 OAL 10,20,000 C retired on 1 st April 2016 and the following were agreed upon: a) Land and Building revalued at 120 % and furniture at 75% of their book value. b) Bank loan is fully paid off by the firm. c) 10% of debtors and bills receivable were provided as bad and doubtful debts d) Vehicles were depreciated by 10% e) is revalued at 105% of the book value.
f) C took away all the investments g) he liability for workmen compensation reserve was settled at Rs. 4000 h) Half the amount due to C was paid immediately and the balance is transferred to his loan account. Prepare: Necessary ledger accounts Balance sheet after C s retirement. Question 5:5 Following is the Balance Sheet of Arun, Barun and Charan as on 31 st December 2015 and their profit and loss ratios are 5:3:2 respectively. LIABILIIES ASSES Arun s capital Barun s capital 5,00,000 6,00,000 Land and building Other fixed assets 4,50,000 6,50,000 Charan s capital 1,50,000 Debtors 35,000 Bills payable 24,000 Less: RBD (5,000) 30,000 Creditors General reserve Bank loan 31,000 15,000 30,000 Cash P and L account 50,000 1,40,000 30,000 OAL 13,50,000 OAL 13,50,000 Charan is retired from the firm on 1-1-2016 and the following agreements have taken place among the partners (a ) Arun and Barun brought sufficient cash to pay Charan in their new profit sharing ratio. here should be a minimum cash balance of 1,00,000 after his retirement. (b) Land and Buildings are to be appreciated by 20% (c) Other Fixed assets are to be depreciated by 10% (d) RBD is maintained at 10% on debtors. (e) Creditors Rs.3,500 no more Payable. (f) Charan s share of goodwill Rs.18,000 is adjusted among capital accounts without raising goodwill account. Prepare Revaluation Account,Capital Accounts of all partners and new Balance Sheet after Charan's retirement Question 5:6 (ISC 2016)
Pihu, Geeta and Nita are partners in a firm, sharing profits and losses in the ratio 3:2:1. On 31 st March, 2015, their Balance Sheet was as under: LIABILIIES Sundry creditors General reserve Capitals: Pihu 79,000 Geeta 70,000 Nita 61,000 15,000 9,000 ASSES Cash at bank Sundry debtors 25,000 Less: PBD (1,300) Plant and machinery Land and building 16,000 23,700 14,300 60,000 1,20,000 2, OAL 2,34,000 OAL 2,34,000 Nita retires on 1 st April 2015, subject to the following adjustments; a) Land and building to be reduced by 10% b) Goodwill to be valued at Rs. 54,000 c) Provision for doubtful debts to be raised to 10% of debtors, the excess provision being created from general reserve. he balance of the general reserve to be distributed among partners. d) Creditors of Rs. 3,000 were paid by Pihu for which she is not to be reimbursed. e) he continuing partners to share profits and losses in future in the ratio of 5:4 f) Nita to be paid Rs. 29,800 on retirement and the remaining amount in two equal installments together with interest @10% p.a. on the outstanding balance. he first installment of Nita s loan to be paid on 31 st March 2016. You are required to prepare; i) Revaluation account ii) Partners capital account iii) Nita s loan account till it is finally closed. (Ans: Revaluation loss 9,000; Partners capital account Pihu 75,400, Geeta 63,600, Nita s loan 40,000; Pihu s Gain 1/18, Geeta s gain 2/18) Question 5:7 Lalit, Madhur and Neena were partners sharing profits as 50%, 30% and 20%. On March 31 st 2013 their balance sheet was as follows: LIABILIIES Capitals: Lalit Madhur Neena 50,000 40,000 25,000 ASSES Cash at bank Sundry debtors 47,000 Less: PBD (3,000) Investment 34,000 44,000 40,000
Creditors Employee provident fund Investment fluctuation fund 28,000 Goodwill Profit and loss account 15,000 20,000 OAL 1,63,000 OAL 1,63,000 On this date, Madhur retired, the following points agreed upon: a) he goodwill of the firm was valued at Rs. 51,000 b) here was a claim for workman compensation to the extent of Rs. 6,000 c) Investment were brought down to Rs. 15,000 d) Provision fr bad debt was reduced by Rs. 1,000 e) Madhur was paid Rs, 10,300 in cash and the balance was transferred to his loan account payable in two equal installments together with interest @ 12 % p.a. Prepare Madhur s capital account and his loan account until it s paid off.