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NCERT Solution For Class 12 Accountancy Chapter 4 – Reconstitution Of A Partnership Firm – Retirement/Death Of A Partner

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NCERT solution for class 12 Accountancy Chapter 4 – Reconstitution Of A Partnership Firm – Retirement/Death Of A Partner



Short Questions for NCERT Accountancy Solutions Class 12 Part 1 Chapter 4


 

1. What are the different ways in which a partner can retire from the firm?

Here are the different ways:

1. For a partner to retire consent of firm’s co-partners is required. A partner can retire if all partners agree with the decision to retire.

2. A partner can express his desire to retire by issuing a notice to the firm in case there is a written agreement.

3. A partner can retire by giving a written notice to all other partners in absence.

 

2. Write the various matters that need adjustments at the time of retirement of partner/partners.

At the time of retirement of partner/partners, following matters needs adjustment:

1. Determining new gaining ratio of the partners who are remaining in the firm.

2. Determine new ratio of firms remaining partners.

3. Determine goodwill of the firm and ensure its proper accounting treatment

4. Revaluating liabilities and assets of the new firm.

5. Distributing among all the partners the accumulated profits and losses, along with reserves.

6. Retiring partner’s settlement

7. Revised calculation of capital accounts of remaining partners and their new and updated profit sharing ratio.

8. Joint life policy treatment.

 

3. Distinguish between sacrificing ratio and gaining ratio.

Basis of DifferenceSacrificing ratioGaining Ratio
1. MeaningThe ratio where a partner of a firm agree to sacrifice the profit share and make it available for new partner.That ratio in which a partner obtains the profit share from the partner who is leaving the firm.
2. CalculationCalculated as difference between old and new ratioCalculated as difference between new and old ratio
3. TimeCalculation done at the admission of a new partnerCalculation done at the retirement/death of a partner.
4. ObjectiveIt is used to determine the profit and loss share that is sacrificed by the current partners at the time of joining of new partner.It is used to determine profit and loss share that is obtained by the existing partners when a partner retires/becomes deceased
5. EffectExisting partners profit share is reducedContinuing partner profit share is increased.

 

 

4. Why do firm revaluate assets and reassess their liabilities on retirement or on the event of death of a partner?

As a partner retires or is taken away by death, it becomes critical to determine the liabilities and assets value on the current date to get a fair idea about its true worth. Revaluation becomes essential as liabilities and assets may increase or decrease in value as time passes. It may also happen that certain liabilities and assets had remained unrecorded the last time books are updated. As a partner retires/ death happens, it may have a positive/negative impact on the value of firm’s liabilities and assets. Therefore, it is a good idea to revaluate the value so that the true profit/loss can be determined so that it can be share d among partners as per sharing ratio as determined at the time of setting up partnership.

5. Why a retiring/deceased partner is entitled to a share of goodwill of the firm?

A firm earns goodwill by the efforts of the partners and is regarded as one of the most important intangible asset. After a partner retires or is dead, the good work that was done by that partner should be acknowledged and hence a proper compensation should be provided to the partner in form of a part of goodwill of firm.


Long Questions for NCERT Accountancy Solutions Class 12 Part 1 Chapter 4


1. Explain the modes of payment to a retiring partner.

Payment modes are discussed below:

 

1. When amount due to retiring partner is paid back in a lump sum amount, on the day of retirement, journal entries are as mentioned below

 

Retiring Partner’s Capital A/cDr.
To Cash/Bank A/c
(Payment made to the retired partner)

 

2. Amount to be paid to retiring partner can be paid in installments to the loan account, which helps partner earn interest on loan.

Retiring Partner’s Capital A/cDr.
To Retiring Partner’s Loan A/c
(Capital account balance of Retiring partner transferred to account to the Loan account of retiring partner).

 

3. Part Payment: When the retiring partner needs to be paid some amount in cash and some as equal installments, then a certain sum of money is paid on day of retirement and rest of the sum is paid on a monthly basis to partners loan account. Following entries help show this type of transaction.

Retiring Partner’s Capital A/c (total due amount payable to partner) Dr.

To Retiring Partner’s Loan A/c (amount transferred to loan account)

To Cash A/c (part payment in form of cash)

(Part payment to retiring partner in cash as well as transfer to loan account)

 

2. How will you compute the amount payable to a deceased partner?

To determine the amount payable to the deceased partner, the legal executor is entitled to calculate that. It is arrived at posting these items in debit and credit side respectively.

Items to be posted on debit side:

1. Credit balance of deceased partner’s capital account.

2. Profit share of the partner till his/her death

3. Share of goodwill of the partner.

4. Any gain on revaluation of liabilities and assets

5. Any salary or commission earned, till the date of demise.

6. Share in accumulated reserves and profit account

7. Any interest earned on capital

8. Share in life insurance policy

Items to be posted on credit side:

1. Deceased Partners debit balance from capital account.

2. Total drawings done till death of partner

3. Interest charged on drawings if any till the day of death.

4. Reduction in profit share or loss up to date of death.

5. Share of accumulated loss for the partner and firm

A legal executor balances excess of credit over the debit side of a deceased partner.

 

Deceased Partner’s Capital Account
Dr.    Cr.
DateParticularsJ.F.Amount 

DateParticularsJ.F.Amount 

Revaluation A/c (Loss)Balance b/d
Profit and Loss Suspense A/c 

(Loss share till the date of death)

Profit and Loss Suspense A/c 

(Share of profit up to the date of the death)

Goodwill
Accumulated Losses A/cReserves and Profits
Goodwill A/c (Written off)Revaluation A/c (gain)
Partner Executor’s A/cJoint Life Policy A/c
(Balancing Figure)Interest on Capital A/c
Salary A/c
Commission A/c

 

3. Explain the treatment of goodwill at the time of retirement or on the event of death of a partner?

Goodwill is subjected to treatment on these two conditions:

1. When goodwill is present in the books of firm.

2. When goodwill is not present in books of the firm

1. When goodwill is present in books

The first step is to write off the goodwill if it is present in the books and must be distributed among the partners in the firm in the agreed profit sharing ratio. The journal entry will be like:

All Partners’ Capital A/c Dr.

To Goodwill A/c

(Goodwill written off among partners)

The next step will be adjusting goodwill using partners’ capital account with the share of goodwill of the deceased or retired partner

Remaining Partner’s Capital A/c Dr.

To Retiring/Deceased Partner’s Capital A/c (partners’ capital account debited and retiring/deceased partners account credited)

2. When goodwill is not present in books of the firm

As goodwill is not present in the books of firm, it gets adjusted from the partners’ capital account along with the deceased/retired partners share. Following entry is passed:

Remaining Partner’s Capital A/c Dr.

To Retiring/Deceased Partner’s Capital A/c

(Partners’ capital account debited and retiring/deceased partners account credited)

 

 

4. Discuss the various methods of computing the share in profits in the event of death of a partner.

In the unlikely event of the death of a partner during the year, the executor is entitled for a profit sharing up to the date of death of the partner. Profit sharing can be calculated by two methods:

1. On Time Basis: In this method, profit earned till the date of partners death is considered for calculation on the basis of last year/year’s profit or average profit earned in last few years. It is assumed that profit will remain constant throughout the year and the deceased partner will be eligible for profit share which is proportionate till the date of partner’s death.

Share of Deceased Partner in Profit =

Chp 4-1

2) On the sale basis: Calculation of profit is based on last year’s sale as per this method and also it is assumed that net profit of current year is similar to last year’s profits.

Share of Deceased Partner’s Profit =
Chp 4-2×Sales counted from the beginning of the current year up to the date of death × Share of deceased partner

Numerical Questions for NCERT Accountancy Solutions Class 12 Part 1 Chapter 4

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 ₹ 1, 80,000. Aparna and Sonia decided to share future in the ratio of 3:2. Pass necessary Journal entries.

 

 Books of Aparna, and Sonia 

 

Journal

 

DateParticularsL.F.Amount 

Amount 

Aparna’s Capitals A/cDr.18,000
Sonia’s Capital A/cDr.42,000
To Manisha’s Capital A/c60,000
(Manisha’s share of goodwill adjusted to Aparna’s and 

Sonia’s Capital Account in their gaining ratio )

 

Working Notes:

1. Manisha’s share in goodwill:

Total goodwill of the firm × Retiring Partner’s Share =
Chp 4-3

2. Gaining Ratio = New Ratio − Old Ratio

Aparna Gaining share
Chp 4-4

Chp 4-5

Gaining Ratio between Aparna and Sonia = 3: 7

3. Aparna’s share in goodwill
Chp 4-6

Sonia’s share in goodwill
f

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 ₹ 60,000. Sangeeta retires and goodwill is valued at ₹ 90,000. Saroj and Shanti decided to share future profits equally. Record necessary Journal entries.

 

 

 Books of Saroj and Shanti 

 

Journal

 

DateParticularsL.F.Amount 

Amount 

Sangeeta’s Capital A/cDr.12,000
Saroj’s Capital A/cDr.18,000
Shanti’s Capital A/cDr.30,000
To Goodwill A/c60,000
(Goodwill written off)
Saroj’s Capital A/cDr.18,000
To Sangeeta’s Capital A/c18,000
(Sangeeta’s share of goodwill adjusted to Saroj’s Capital 

Account in her gaining ratio)

 

Working Notes:

 

1. Sangeeta’s share of goodwill.

Total goodwill of the firm ´ Retiring Partner’s share Chp 4-8

 

2. Gaining Ratio = New Ratio – Old Ratio

Saroj’s Gaining Share Chp 4-9

Shanti’s Gaining Share Chp 4-10

 

3. Himanshu, Gagan and Naman are partners sharing profits and losses in the ratio of 3:2:1. On March 31, 2017, Naman retires.

The various liabilities and assets of the firm on the date were as follows:

Cash ₹ 10,000, Building ₹ 1, 00,000, Plant and Machinery ₹ 40,000, Stock ₹ 20,000, Debtors ₹ 20,000 and Investments ₹ 30,000.

The following was agreed upon between the partners on Naman’s retirement:

(i)Building to be appreciated by 20%.
(ii)Plant and Machinery to be depreciated by 10%.
(iii)A provision of 5% on debtors to be created for bad and doubtful debts.
(iv)Stock was to be valued at ₹ 18,000 and Investment at ₹ 35,000.

Record the necessary journal entries to the above effect and prepare the Revaluation Account.

 

 Books of Himanshu and Gagan 

 

Journal

DateParticularsL.F.Amount 

Amount 

Building A/cDr.20,000
Investment A/cDr.5,000
To Revaluation A/cDr.25,000
(Value of Building and Investment increased at the time 

of Naman’s retirement)

Revaluation A/cDr.7,000
To Plant and Machinery A/c4,000
To Provision for Bad and Doubt Debts A/c1,000
To Stock A/c2,000
(Assets revalued and Provision for Bad and Doubtful Debts 

made at the time of Naman’s retirement)

Revaluation A/cDr.18,000
To Himanshu’s Capital A/c9,000
To Gagan’s Capital A/c6,000
To Naman’s Capital A/c3,000
(Profit on revaluation transferred to all Partners’ Capital 

Accounts in their old profit sharing ratio)

 

Revaluation Account
Dr. Cr.
ParticularAmount 

ParticularAmount 

Plant and Machinery4,000Building20,000
Stock2,000Investment5,000
Provision for Bad and Doubtful Debts1,000
Profit transferred to Capital Account:
Himanshu9,000
Gagan6,000
Naman3,00018,000
25,00025,000

 

 

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 Reserve’s ₹ 36,000 and Profit and Loss Account (Dr.) ₹ 15,000.

Pass the necessary journal entries to the above effect.

 

 

 Books of Naresh and Bishwajeet 

 

Journal

 

DateParticularsL.F.Amount 

Amount 

General Reserve A/cDr.36,000
To Naresh’s Capital A/c12,000
To Raj Kumar’s Capital A/c12,000
To Bishwajeet’s Capital A/c12,000
(General Reserve distributed among old partner in old ratio)
Naresh’s Capital A/cDr.5,000
Raj Kumar’s Capital A/cDr.5,000
Bishwajeet’s Capital A/cDr.5,000
To Profit and Loss A/c15,000
(Debit balance of Profit and Loss Account written off)

 

5. Digvijay, Brijesh and Parakaram were partners in a firm sharing profits in the ratio of 2:2:1. Their Balance Sheet as on March 31, 2017 was as follows:

 

LiabilitiesAmount 

AssetsAmount 

Creditors49,000Cash8,000
Reserves18,500Debtors19,000
Digvijay’s Capital82,000Stock42,000
Brijesh’s Capital60,000Buildings2,07,000
Parakaram’s Capital75,500Patents9,000
 2,85,0002,85,000
    

 

Brijesh retired on March 31, 2017 on the following terms:

(i)    Goodwill of the firm was valued at ₹ 70,000 and was not to appear in the books.

(ii)   Bad debts amounting to ₹ 2,000 were to be written off.

(iii)  Patents were considered as valueless.

Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of Digvijay and Parakaram after Brijesh’s retirement.

 

 

 

 

 Books of Digvijay and Parakaram 

 

Revaluation Account

Dr. Cr.
ParticularAmount 

ParticularAmount 

Bad Debts2,000
Patents9,000Loss transferred to Capital Account:
Digvijay4,400
Brijesh4,400
Parakaram2,200
11,00011,000

 

Partners’ Capital Account
Dr. Cr.
ParticularssDigvijayBrijeshParakaramParticularssDigvijayBrijeshParakaram
Brijesh’s Capital A/c18,6679,333Balance b/d82,00060,00075,500
Revaluation (Loss)4,4004,4002,200Digvijay’s Capital A/c18,667
Brijesh’s Loan91,000Parakaram’s Capital A/c9,333
Balance c/d66,33367,667Reserves7,4007,4003,700
89,40095,40079,20089,40095,40079,200

 

Balance Sheet as on March 31, 2017  

 

LiabilitiesAmount 

AssetsAmount 

Creditors49,000Cash8,000
Brijesh’s Loan91,000Debtors19,000
Less: Bad Debts2,00017,000
Digvijay’s Capital A/c66,333Stock42,000
Parakaram’s Capital A/c67,667Buildings2,07,000
2,74,0002,74,000

 

Note: As sufficient balance is not available to pay the amount due to Brijesh, the balance of his Capital Account transferred to his Loan Account.

 

Working Note:

 

1. Brijesh’s Share of Goodwill

Total goodwill of the firm ´ Retiring Partner’s Share Chp 4-11

 

2. Gaining Ratio = New Ratio – Old Ratio

 

Digvijay’s ShareChp 4-12

 

Parakaram’s ShareChp 4-13

 

Gaining ratio between Digvijay and Parakaram = 4: 2 or 2: 1

 

 

 

6. Radha, Sheela and Meena were in partnership sharing profits and losses in the proportion of 3:2:1. On April 1, 2017, Sheela retires from the firm. On that date, their Balance Sheet was as follows:

 

LiabilitiesAmount 

AssetsAmount 

Trade Creditors3,000Cash-in-Hand1,500
Bills Payable4,500Cash at Bank7,500
Expenses Owing4,500Debtors15,000
General Reserve13,500Stock12,000
Capitals:Factory Premises22,500
Radha15,000Machinery8,000
Sheela15,000Losse Tools4,000
Meena15,00045,000
  70,50070,500
     

 

The terms were:

a) Goodwill of the firm was valued at ₹ 13,500.

b) Expenses owing to be brought down to ₹ 3,750.

c) Machinery and Loose Tools are to be valued at 10% less than their book value.

d) Factory premises are to be revalued at ₹ 24,300.

Prepare:

1. Revaluation account

2. Partner’s capital accounts and

3. Balance sheet of the firm after retirement of Sheela.

 

 

 

Books of Radha and Meena 

 

Revaluation Account

Dr.Cr.
ParticularsAmount 

ParticularsAmount 

Machinery800Expenses Owing750
Loose Tools400Factory Premises1,800
Profit transferred to Capital Account:
Meena675
Radha450
Sheela2251,350
2,5502,550

 

Parters’ Capital Account
Dr.Cr.
ParticularsRadhaSheelaMeenaParticularsRadhaSheelaMeena
Sheela’s Capital A/c3,3751,125Balance b/d15,00015,00015,000
Sheela’s Loan A/c24,450General Reserve6,7504,5002,250
Balance c/d19,05016,350Revaluation (Profit)675450225
Radha’s Capital A/c3,375
Meena’s Capital A/c1,125
22,42524,45017,47522,42524,45017,475

 

Balance Sheet as on April 01, 2017 

 

LiabilitiesAmount 

AssetsAmount 

Trade Creditors3,000Cash in Hand1,500
Bills Payable4,500Cash at Bank7,500
Expenses Owing3,750Debtors15,000
Sheela’s Loan24,450Stock12,000
Factory Premises24,300
Capitals:Machinery8,000
Radha19,050Less: 10%(800)7,200
Meena16,35035,400Loose Tools4,000
Less: 10%(400)3,600
71,10071,100
     

Working Notes:

Working Notes:

1) Sheela’s share of goodwill

Total goodwill of the firm × Retiring Partner’s share =13,500×26=4, 50013x, 500×26=4,500

2) Gaining Ratio = New Ratio − Old Ratio

Radha’s Share
Chp 4-14

Meena’s Shares
Chp 4-15

Gaining Ratio between Radha and Meena = 6 : 2 or 3 : 1

7. Pankaj, Naresh and Saurabh are partners sharing profits in the ratio of 3:2:1. Naresh retired from the firm due to his illness. On that date the Balance Sheet of the firm was as follows:

Books of Pankaj, Naresh and Saurabh
Balance Sheet as on March 31, 2017
LiabilitiesAmount ₹AssetsAmount ₹
General Reserve12,000Bank7,600
Sundry Creditors15,000Debtors6,000
Bills Payable12,000Less: Provision for Doubtful Debt4005,600
Outstanding Salary2,200
Provision for Legal Damages6,000Stock9,000
Capitals:Furniture41,000
Pankaj46,000Premises80,000
Naresh30,000
Saurabh20,00096,000
1,43,2001,43,200

Additional Information

(i) Premises have appreciated by 20%, stock depreciated by 10% and provision for doubtful debts was to be made 5% on debtors. Further, provision for legal damages is to be made for ₹ 1,200 and furniture to be brought up to ₹ 45,000.

(ii) Goodwill of the firm be valued at ₹ 42,000.

(iii) ₹ 26,000 from Naresh’s Capital account be transferred to his loan account and balance be paid through bank; if required, necessary loan may be obtained from Bank.

(iv) New profit sharing ratio of Pankaj and Saurabh is decided to be 5:1.

Give the necessary ledger accounts and balance sheet of the firm after Naresh’s retirement.

Revaluation Account
Dr.Cr.
ParticularsAmount 

ParticularsAmount 

Stock900Premises16,000
Provision for Legal Damages1,200Provision for Doubtful Debts100
Profit transferred to Capital:Furniture4,000
Pankaj9,000
Naresh6,000
Saurabh3,00018,000
20,10020,100

 

Partners’ Capital Accounts
Dr.Cr.
ParticularsPankajNareshSaurabhParticularsPankajNareshSaurabh
Naresh’s Capital A/c14,000Balance b/d46,00030,00020,000
Naresh’s Loan A/c26,000General Reserve6,0004,0002,000
Bank28,000Revaluation (Profit)9,0006,0003,000
Balance c/d47,00025,000Pankaj’s Capital A/c14,000
61,00054,00025,00061,00054,00025,000
Bank Account
Cr.
ParticularsAmount 

ParticularsAmount 

Balance b/d7,600Naresh’s Capital A/c28,000
Bank Loan (Balancing Figure)20,400
28,00028,000

 

Balance Sheet as on March 31, 2017
LiabilitiesAmount 

AssetsAmount 

Sundry Creditors15,000Debtors6,000
Bills Payable12,000Less: Provision for Doubtful Debts3005,700
Bank Loan/overdraft20,400Stock8,100
Outstanding Salaries2,200Furniture45,000
Provision for Legal Damages7,200Premises96,000
Naresh’s Loan26,000
Capitals:
Pankaj47,000
Saurabh25,00072,000
1,54,8001,54,800

 

 

 

8. Puneet, Pankaj and Pammy are partners in a business sharing profits and losses in the ratio of 2:2:1 respectively. Their balance sheet as on March 31, 2017 was as follows:

 

Books of Puneet, Pankaj and Pammy 

 

Balance Sheet as on March 31, 2017 

 

LiabilitiesAmount 

AssetsAmount 

Sundry Creditors1,00,000Cash at Bank20,000
Capital Accounts:Stock30,000
Puneet60,000Sundry Debtors80,000
Pankaj1,00,000Investments70,000
Pammy40,0002,00,000Furniture35,000
Reserve50,000Buildings1,15,000
3,50,0003,50,000

 

Mr. Pammy died on September 30, 2017. The partnership deed provided the following:

(i)The deceased partner will be entitled to his share of profit up to the date of death calculated on the basis of previous year’s profit.
(ii)He will be entitled to his share of goodwill of the firm calculated on the basis of 3 years’ purchase of average of last 4 years’ profit. The profits for the last four financial years are given below: for 2013–14; ₹ 80,000; for 2014–15, ₹ 50,000; for 2015–16, ₹ 40,000; for 2016–17, ₹ 30,000. 

The drawings of the deceased partner up to the date of death amounted to ₹ 10,000. Interest on capital is to be allowed at 12% per annum.

Surviving partners agreed that ₹ 15,400 should be paid to the executors immediately and the balance in four equal yearly instalments with interest at 12% p.a. on outstanding balance.

Show Mr. Pammy’s Capital account, his Executor’s account till the settlement of the amount due.

 

 

 

 

Pammy’s Capital Account 

 

Dr.Cr.
ParticularsAmount 

ParticularsAmount 

Drawings10,000Balance b/d40,000
Pammy Executor’s A/c75,400Profit and Loss (Suspense)3,000
Puneet’s Capital A/c15,000
Pankaj’s Capital A/c15,000
Interest on Capital2,400
Reserve10,000
85,40085,400

 

Pammy’s Executor Account
Dr.Cr.
DateParticularsJ.F.Amount 

DateParticularsJ.F.Amount 

2017-182017-18
Sep. 30Bank15,400Sep. 30Pammy’s Capital A/c75,400
Mar. 31Balance c/d63,600Mar. 31Interest3,600
79,00079,000
2018-192018-19
Sep. 30Bank22,200April 01Balance b/d63,600
(15,000+3,600+3,600)Sep. 30Interest3,600
Mar. 31Balance c/d47,700Mar. 31Interest2,700
69,90069,900
2019-202019-20
Sep. 30Bank20,400April 01Balance b/d47,700
Mar. 31Balance c/d31,800Sep. 30Interest2,700
Mar. 31Interest1,800
52,20052,200
2020-212020-21
Sep. 30Bank18,600April 01Balance b/d31,800
(15,000+1,800+1,800)Sep. 30Interest1,800
Mar. 31Balance c/d15,900Mar. 31Interest900
34,50034,500
2021-222021-22
Sep. 30Bank16,800April 01Balance b/d15,900
(15,000+900+900)Sep. 30Interest900
16,80016,800

 

Working Notes:

 

1) Pammy’s Share of Profit

Previous Year’s Profit ´ Proportionate Period ´ Share of Deceased Partner Chp 4-17

 

2) Pammy’s Share of Goodwill

 

Goodwill of the firm = Average Profit ´ Numbers of Year’s Purchase

 

Average Profit Chp 4-18

 

Goodwill of the firm = 50,000 ´ 3 = ₹ 1,50,000

 

Chp 4-19

 

3) Gaining Ratio = New Ratio – Old Ratio

 

Puneet’s ShareChp 4-20

 

Pankaj’s ShareChp 4-21

 

Gaining Ratio between Puneet and Pankaj = 2 : 2 or 1 : 1

 

4) Interest on Capital for 6 months, i.e. from April 1, 2007 to September 30, 2007

 

Amount of Capital ´ Rate of Interest ´ Period Chp 4-22

 

5) Interest Amount

The firm closes its books every year on March 31, while instalments to Pammy’s Executor are paid on September 30 every year.

Amount outstanding on 30 September = 75,400 – 15,400 = ₹ 60,000

Chp 4-23

 

9. Following is the Balance Sheet of Prateek, Rockey and Kushal as on March 31, 2017.

 

Books of Prateek, Rockey and Kushal 

 

Balance Sheet as on March 31, 2017 

 

LiabilitiesAmount 

AssetsAmount 

Sundry Creditors16,000Bills Receivable16,000
General Reserve16,000Furniture22,600
Capital Accounts:Stock20,400
Prateek30,000Sundry Debtors22,000
Rockey20,000Cash at Bank18,000
Kushal20,00070,000Cash in Hand3,000
 1,02,0001,02,000
    

 

Rockey died on June 30, 2017. Under the terms of the partnership deed, the executors of a deceased partner were entitled to:

a) Amount standing to the credit of the Partner’s Capital account.

b) Interest on capital at 5% per annum.

c) Share of goodwill on the basis of twice the average of the past three years’ profit and

d) Share of profit from the closing date of the last financial year to the date of death on the basis of last year’s profit.

Profits for the year ending on March 31, 2015, March 31, 2016 and March 31, 2017 were ₹ 12,000, ₹ 16,000 and ₹ 14,000 respectively. Profits were shared in the ratio of capitals.

Pass the necessary journal entries and draw up Rockey’s capital account to be rendered to his executor.

 

 

 

 Books of Prateek and Kushal 

 

Journal

DateParticularsL.F.Amount 

Amount 

2017
June 30Interest on Capital A/cDr.250
Profit and Loss (Suspense) A/cDr.1,000
General Reserve A/cDr.4,571
To Rockey’s Capital A/c5,821
(Share of profit, interest on capital and share of General 

Reserve credited to Rockey’s Capital Account)

June 30Prateek’s Capital A/cDr.4,800
Kushal’s Capital A/cDr.3,200
To Rockey’s Capital A/c8,000
(Rockey’s share of goodwill adjusted to Prateek’s and 

Kushal’s Capital Account in their gaining ratio, 3:2)

June 30Rockey’s Capital A/cDr.33,821
To Rockey Executor’s A/c33,821
(Balance of Rockey’s Capital Account transferred to his 

Executor’s Account)

 

Rockey’s Capital Account
Dr.Cr.
DateParticularsJ.F.Amount 

DateParticularsJ.F.Amount 

20172017
April 1Rockey’s Executor A/c33,821April 1Balance b/d20,000
Interest on Capital250
Profit and Loss (Suspense) A/c1,000
General Reserve4,571
Prateek’s Capital4,800
Kushal’s Capital3,200
33,82133,821

 

 

 

Working Notes:

1. Rockey’s Share of Profit = Previous year’s profit × Proportionate Period × Share of Deceased Partner

=
Chp 4-24

2. Rockey’s Share of Goodwill

Goodwill of a firm = Average profit × Numbers of year’s Purchase

Chp 4-25

Goodwill of a firm = 14,000 × 2 = ₹ 28,000

Chp 4-26

3. Gaining Ratio = New Ratio − Old Ratio

Chp 4-27

Chp 4-28

Gaining Ratio between Prateek and Kushal = 9:4 or 3:2

4. Interest on Capital for 3 months i.e. from April 1, 2017 to June 30, 2017

Amount of × Rate of Interest × Period
Chp 4-29

 

10. Narang, Suri and Bajaj are partners in a firm sharing profits and losses in proportion of 1/2 , 1/6 and 1/3 respectively. The Balance Sheet on April 1, 2015 was as follows:

 

Books of Suri, Narang and Bajaj 

 

Balance Sheet as on April 1, 2015

 

LiabilitiesAmount 

AssetsAmount 

Bills Payable12,000Freehold Premises40,000
Sundry Creditors18,000Machinery30,000
Reserves12,000Furniture12,000
Capital Accounts:Stock22,000
Narang30,000Sundry Debtors20,000
Suri20,000Less: Reserve1,00019,000
Bajaj28,00088,000for Bad Debt
Cash7,000
 1,30,0001,30,000
    

 

Bajaj retires from the business and the partners agree to the following:

a) Freehold premises and stock are to be appreciated by 20% and 15% respectively.

b) Machinery and furniture are to be depreciated by 10% and 7% respectively.

c) Bad Debts reserve is to be increased to ₹ 1,500.

d) Goodwill is valued at ₹ 21,000 on Bajaj’s retirement.

e) The continuing partners have decided to adjust their capitals in their new profit sharing ratio after retirement of Bajaj. Surplus/deficit, if any, in their capital accounts will be adjusted through current accounts.

Prepare necessary ledger accounts and draw the Balance Sheet of the reconstituted firm.

 

 

Revaluation Account
Dr.Cr.
ParticularsAmount 

ParticularsAmount 

Machinery3,000Freehold Properties8,000
Furniture840Stock3,300
Reserve for Bad debts500
Capitals:
Narang3,480
Suri1,160
Bajaj2,3206,960
11,30011,300

 

Partners’ Capital Account
Dr.Cr.
ParticularsNarangSuriBajajParticularsNarangSuriBajaj
Bajaj’s Capital A/c5,2501,750Balance b/d30,00030,00028,000
Bajaj’s Loan41,320Reserves6,0002,0004,000
Revaluation (Profit)3,4801,1602,320
Balance c/d34,23031,410Narang’s Capital A/c5,250
Suri’s Capital A/c1,750
39,48033,16041,32039,48033,16041,320
Suri’s Current A/c15,000Balance b/d34,23031,410
Narang’s Current A/c15,000
Balance c/d49,23016,410
49,23031,41049,23031,410

 

Balance Sheet as on April 01, 2015 

 

LiabilitiesAmount 

AssetsAmount 

Bills Payable12,000Free hold Premises48,000
Sundry Creditors18,000Machinery27,000
Bajaj’s Loan41,320Furniture11,160
Suri’s Current15,000Stock25,300
Capital Account:Sundry Debtors20,000
Narang49,230Less: Reserve for Bad Debt1,50018,500
Suri16,41065,640Cash7,000
Narang’s Current Account15,000
1,51,9601,51,960

 

Working Notes:

 

1. Bajaj Share in Goodwill = Total Goodwill of the firm ´ Retiring Partner’s Share = Chp 4-30

 

2. Gaining Ratio = New Ratio – Old Ratio

 

Chp 4-31

 

Chp 4-32

 

Gaining Ratio between Narang and Suri = 3:1

 

3. Calculation of New Capitals of the existing partners.

 

Balance in Narang’s Capital=34,230
Balance in Suri’s Capital=31,410
Total Capital of the New firm after revaluation of assets and
liabilities and adjustment of  Goodwill and Reserves=₹ 65,640

 

Based on new profit sharing ratio of 3:1

Chp 4-33

Chp 4-34

NOTE:

i. In the given Question Suri’s Capital is ₹ 30,000 instead of ₹ 20,000.

ii. Due to insufficient balance in Bajaj’s Capital Account, the amount due to Bajaj is transferred to his Loan Account.

 

 

 

11. The Balance Sheet of Rajesh, Pramod and Nishant who were sharing profits in proportion to their capitals stood as on March 31, 2015:

 

Books of Rajesh, Pramod and Nishant 

 

Balance Sheet as on March 31, 2015

 

LiabilitiesAmount 

AssetsAmount 

Bills Payable6,250Factory Building12,000
Sundry Creditors10,000Debtors10,500
Reserve Fund2,750Less: Reserve50010,000
Capital Accounts:Bills Receivable7,000
Rajesh20,000Stock15,500
Pramod15,000Plant and Machinery11,500
Nishant15,00050,000Bank Balance13,000
 69,00069,000
    

 

Pramod retired on the date of Balance Sheet and the following adjustments were made:

a) Stock was valued at 10% less than the book value.

b) Factory buildings were appreciated by 12%.

c) Reserve for doubtful debts be created up to 5%.

d) Reserve for legal charges to be made at ₹ 265.

e) The goodwill of the firm be fixed at ₹ 10,000.

f) The capital of the new firm be fixed at ₹ 30,000. The continuing partners decide to keep their capitals in the new profit sharing ratio of 3:2.

Pass journal entries and prepare the balance sheet of the reconstituted firm after transferring the balance in Pramod’s Capital account to his loan account.

 

 

Journal 

 

DateParticularsL.F.Amount 

Amount 

2015
Mar. 31Revaluation A/cDr.1,840
To Stock A/c1,550
To Reserve for Doubtful Debts A/c25
To Reserve for Legal Charges A/c265
(Assets and Liabilities are revalued)
Mar. 31Factory Building A/cDr.1,440
To Revaluation A/c1,440
( Factory Building appreciated)
Mar. 31Rajesh’s Capital A/cDr.160
Pramod’s Capital A/cDr.120
Nishant’s Capital A/cDr.120
To Revaluation A/c400
(Loss on Revaluation adjusted to Partners’ Capital Account)
Mar. 31Rajesh’s Capital A/cDr.2,000
Nishant’s Capital A/cDr.1,000
To Pramod Capital’s A/c3,000
(Pramod’s share of goodwill adjusted to Rajesh’s and Nishant’s Capital Account in their gaining ratio)
Mar. 31Reserve Fund A/cDr.2,750
To Rajesh’s Capital A/c1,100
To Pramod’s Capital A/c825
To Nishant’s Capital A/c825
(Reserve Fund distributed all the partners)
Mar. 31Pramod’s Capital A/cDr.18,705
To Pramod’s Loan A/c18,705
(Pramod’s Capital transferred to his Loan Account)
Mar. 31Rajesh’s Capital A/cDr.940
Nishant’s Capital A/cDr.2,705
To Rajesh’s Current A/c940
To Nishant’s Current A/c2,705
(Excess in Capital Account is transferred to Current Account)

 

Parters’ Capital Account
Dr.Cr.
ParticularsRajeshPramodNishantParticularsRajeshPramodNishant
Revaluation (Loss)160120120Balance b/d20,00015,00015,000
Pramod’s Capital A/c2,0001,000Reserve Fund1,100825825
Pramod’s Loan A/c18,705Rajesh’s Capital A/c2,000
Rajesh’s Current A/c940Nishant’s Capital A/c1,000
Nishant’s Current A/c2,705
Balance c/d18,00012,000
21,10018,82515,82521,10018,82515,825

 

Balance Sheet as on March 31, 2015 

 

LiabilitiesAmount 

AssetsAmount 

Bills Payable6,250Plant and Machinery11,500
Sundry Creditors10,000Debtors10,500
Reserve for Legal Charges265Less: Reserve(525)9,975
Pramod’s Loan18,705Bills Receivable7,000
Current Account:Stock15,500
Rajesh940Less: 10% Depreciation(1,550)13,950
Nishant2,7053,645
Capital Account:Factory Building12,00013,440
Rajesh18,000Add: 12% Appreciation1,440
Nishant12,00030,000Bank Balance13,000
68,86568,865

 

Working Notes:

1) Pramod’s share of goodwill = Total goodwill of the firm × Retiring Partner’s Share =
Chp 4-35

2) Gaining Ratio = New Ratio − Old Ratio

Chp 4-36

Chp 4-37

Gaining Ratio between Rajesh and Nishant = 2:1

NOTE: In the above solution, in order to adjust the capital of remaining partners in the new firm according to their new profit sharing ratio, the surplus or the deficit of Capital Account is transferred to their Current Account. But, in order to match the answer with that of given in the book, the surplus or the deficit amount of the Partners’ Capital Account, will either be withdrawn or brought in by the old partners. This treatment will be shown in the Partners’ Capital itself and no need to transfer the surplus or deficit capital balance to their Current Accounts. The following Journal entry is passed to record the withdrawal of surplus capital by the partners.

If existing partners withdraw their excess capital

Journal entry

 

Rajesh’s Capital A/cDr.940
Nishant’s Capital A/cDr.2,705
To Bank A/c3,645
(Surplus Capital withdrawn)

 

Balance Sheet as on March 31, 2015 

 

LiabilitiesAmount 

AssetsAmount 

Bills Payable6,250Plant and Machinery11,500
Sundry Creditors10,000Debtors10,500
Reserve for Legal Charges265Less: Reserve(525)9,975
Pramod’s Loan18,705Bills Receivable7,000
Capital:Stock15,500
Rajesh18,000Less: 10% Depreciation(1,550)13,950
Nishant12,00030,000 
Factory Building12,000
Add: 12% Appreciation1,44013,440
Bank Balance9,355
65,22065,220

 

 

12. Following is the Balance Sheet of Jain, Gupta and Malik as on March 31, 2016.

 

Books of Jain, Gupta and Malik 

Balance Sheet as on March 31, 2016

 

LiabilitiesAmount 

AssetsAmount 

Sundry Creditors19,800Land and Building26,000
Telephone Bills Outstanding300Bonds14,370
Accounts Payable8,950Cash5,500
Accumulated Profits16,750Bills Receivable23,450
Sundry Debtors26,700
Capitals :Stock18,100
Jain40,000Office Furniture18,250
Gupta60,000Plants and Machinery20,230
Malik20,0001,20,000Computers13,200
1,65,8001,65,800

 

The partners have been sharing profits in the ratio of 5:3:2. Malik decides to retire from business on April 1, 2016 and his share in the business is to be calculated as per the following terms of revaluation of liabilities and assets : Stock, ₹ 20,000; Office furniture, ₹ 14,250; Plant and Machinery ₹ 23,530; Land and Building ₹ 20,000.

A provision of ₹ 1,700 to be created for doubtful debts. The goodwill of the firm is valued at ₹ 9,000.

The continuing partners agreed to pay ₹ 16,500 as cash on retirement of Malik, to be contributed by continuing partners in the ratio of 3:2. The balance in the capital account of Malik will be treated as loan.

Prepare Revaluation account, capital accounts, and Balance Sheet of the reconstituted firm.

In the books of Jain and Gupta 

 

Revaluation Account

Dr.Cr.
ParticularsAmount 

ParticularsAmount 

Office Furniture4,000Stock1,900
Land and Building6,000Plant and Machinery3,300
Provision for Doubtful Debts1,700Loss transferred to
Jain’s Capital A/c3,250
Gupta’s Capital A/c1,950
Malik’s Capital A/c1,3006,500
11,70011,700

 

Partners’ Capital Account
Dr.Cr.
ParticularsJainGuptaMalikParticularsJainGuptaMalik
Revaluation (Loss)3,2501,9501,300Balance b/d40,00060,00020,000
Malik’s Capital1,125675Accumulated Profits8,3755,0253,350
Cash16,500Jain’s Capital A/c1,125
Malik’s Loan7,350Gupta’s Capital A/c675
Balance c/d53,90069,000Cash9,9006,600
58,27571,62525,15058,27571,62525,150

 

 

Balance Sheet

LiabilitiesAmount 

AssetsAmount 

Sundry Creditors19,800Stock (18,100 + 1,900)20,000
Telephone Bills Outstanding300Bonds14,370
Accounts Payable8,950Cash5,500
Malik’s Loan7,350Bills Receivable23,450
Sundry Debtors26,700
Partners’ Capital:Less: Provision for Bad Debts1,70025,000
Jain53,900Land and Building (26,000 – 6,000)20,000
Gupta69,0001,22,900Office Furniture (18,250 – 4,000)14,250
Plant and Machinery (20,230 + 3,300)23,530
Computers13,200
1,59,3001,59,300

 

Working Note:

 

1) Malik’s share of goodwill = Total Goodwill × Retiring Partner Share =
Chp 4-38

 

2) Gaining Ratio = New Ratio – Old Ratio

Chp 4-39

Chp 4-40

Gaining Ratio between Jain and Gupta = 10:6 or 5:3

13. Arti, Bharti and Seema are partners sharing profits in the proportion of 3:2:1 and their Balance Sheet as on March 31, 2016 stood as follows:

 

Books of Arti, Bharti and Seema 

 

Balance Sheet as on March 31, 2016

 

LiabilitiesAmount 

AssetsAmount 

Bills Payable12,000Buildings21,000
Creditors14,000Cash in Hand12,000
General Reserve12,000Bank13,700
Capitals:Debtors12,000
Arti 20,000Bills Receivable4,300
Bharti12,000Stock1,750
Seema8,00040,000Investment13,250
 78,00078,000
    

 

Bharti died on June 12, 2016 and according to the deed of the said partnership, her executors are entitled to be paid as under:

(a) The capital to her credit at the time of her death and interest thereon @ 10% per annum.

(b) Her proportionate share of reserve fund.

(c) Her share of profits for the intervening period will be based on the sales during that period, which were calculated as ₹ 1, 00,000. The rate of profit during past three years had been 10% on sales.

(d) Goodwill according to her share of profit to be calculated by taking twice the amount of the average profit of the last three years less 20%. The profits of the previous years were:

2013 – ₹ 8,200

2014 – ₹ 9,000

2015 – ₹ 9,800

The investments were sold for ₹ 16,200 and her executors were paid out. Pass the necessary journal entries and write the account of the executors of Bharti.

 

 

 

 Books of Arti and Seema 

 

Journal

 

DateParticularsL.F.Amount 

Amount 

2016
June 12Interest on Capital A/cDr.240
General Reserve A/cDr.4,000
Profit and Loss (Suspense) A/cDr.3,333
To Bharti’s Capital A/c7,573
(Profit, interest and general reserve are in credited to 

Bharti’s Capital account)

June 12Arti’s Capital A/cDr.3,600
Seema’s Capital A/cDr.1,200
To Bharti’s Capital A/c4,800
(Bharti’s share of goodwill adjusted to Arti’s and 

Seema’s Capital Account in their gaining ratio, 3:1)

June 12Bharti’s Capital A/cDr.24,373
To Bharti’s Executor’s A/c24,373
(Bharti’s capital account is transferred to her executor’s 

account)

June 12Bank A/cDr.16,200
To Investment A/c13,250
To Profit on Sale of Investment2,950
(Investment sold)
June 12Bharti’s Executor A/cDr.24,373
To Bank A/c24,373
(Bharti Executor paid)

 

Bharti’s Capital Account
Dr.Cr.
DateParticularsJ.F.Amount 

DateParticularsJ.F.Amount 

20162016
June 12Bharti’s Executor’s A/c24,373Mar. 31Balance b/d12,000
June 12Interest on Capital240
Profit and Loss (Suspense)3,333
General Reserve4,000
Arti’s Capital A/c3,600
Seema’s Capital A/c1,200
24,37324,373

 

Bharti’s Executor’s Account 

 

Dr.Cr.
DateParticularsJ.F.Amount 

DateParticularsJ.F.Amount 

20162016
June 12Bank24,373June 12Bharti’s Capital A/c24,373
24,37324,373

 

 

Working Notes:

1. Bharti’s share of profit = Profit is 10% of sales

Sales during the last year for that period were ₹ 1, 00,000

If sales are ₹ 1, 00,000, then the profit is ₹ 10,000

Chp 4-41

2. Bharti’s Share of Goodwill

Goodwill of the firm = Average Profit × Number of Years Purchase

Chp 4-42

Or, 9,000 − 20% of 9,000 = 9,000 − 1,800 = ₹ 7,200

Goodwill of the firm = 7,200 × 2 = ₹ 14,400

Chp 4-43

3. Gaining Ratio = New Ratio − Old Ratio

Chp 4-44

Chp 4-45

Gaining ratio between Arti and Seema = 3:1

4. Interest on Capital for 73 days, i.e. from April 1, 2016 to June 12, 2016

Interest on capital = Amount of Capital × Ratio of Interest × Period
Chp 4-46

14. Nithya, Sathya and Mithya were partners sharing profits and losses in the ratio of 5:3:2. Their Balance Sheet as on March 31, 2015 was as follows:

 

Books of Nithya, Sathya and Mithya 

 

Balance Sheet at March 31, 2015

 

LiabilitiesAmount 

AssetsAmount 

Creditors14,000Investments10,000
Reserve Fund6,000Goodwill5,000
Capitals:Premises20,000
Nithya30,000Patents6,000
Sathya30,000Machinery30,000
Mithya20,00080,000Stock13,000
Debtors8,000
Bank8,000
1,00,0001,00,000

 

Mithya dies on August 1, 2015. The agreement between the executors of Mithya and the partners stated that:

(a) Goodwill of the firm be valued at NCERT Solutions Accountancy Part 1/img/study_content/editlive_ncert/75/2012_08_23_12_20_14/image3605571988781021547.png times the average profits of last four years. The profits of four years were : in 2011-12, ₹ 13,000; in 2012-13, ₹ 12,000; in 2013-14, ₹ 16,000; and in 2014-15, ₹ 15,000.

(b) The patents are to be valued at ₹ 8,000, Machinery at ₹ 25,000 and Premises at ₹ 25,000.

(c) The share of profit of Mithya should be calculated on the basis of the profit of 2014-15.

(d) ₹ 4,200 should be paid immediately and the balance should be paid in 4 equal half-yearly instalments carrying interest @ 10%.

Record the necessary journal entries to give effect to the above and write the executor’s account till the amount is fully paid. Also prepare the Balance Sheet of Nithya and Sathya as it would appear on August 1, 2015 after giving effect to the adjustments.

 Books of Nithya and Sathya 

 

Journal

 

DateParticularsL.F.Amount 

Amount 

2015
Aug. 1Nithya’s Capital A/cDr.2,500
Sathya’s Capital A/cDr.1,500
Mithya’s Capital A/cDr.1,000
To Goodwill A/c5,000
(Goodwill written off among all the partners)
Aug. 1Patents A/cDr.2,000
Premises A/cDr.5,000
To Revaluation A/c7,000
(Increase in the value of patents and premises)
Aug. 1Revaluation A/cDr.5,000
To Machinery A/c5,000
(Decrease in the value of machinery)
Aug. 1Revaluation A/cDr.2,000
To Nithya’s Capital A/c1,000
To Sathya’s Capital A/c600
To Mithya’s Capital A/c400
(Profit on revaluation of liabilities and assets transferred 

to Partners’ Capital Account)

Aug. 1Reserve Fund A/cDr.6,000
To Nithya’s Capital A/c3,000
To Sathya’s Capital A/c1,800
To Mithya’s Capital A/c1,200
(Reserve Fund transferred to Partners’ Capital Account)
Aug. 1Nithya’s Capital A/cDr.4,375
Sathya’s Capital A/cDr.2,625
To Mithya’s Capital A/c7,000
(Mithya’s share of goodwill adjusted to Nithya’s and 

Sathya’s Capital Account in their gaining ratio, 5:3)

Aug. 1Profit and Loss A/c (Suspense)Dr.1,000
To Mithya’s Capital A/c1,000
(Profit till date of death credited to Mithya’s Capital 

Account)

Aug. 1Mithya’s Capital A/cDr.28,600
To Mithya Executors A/c28,600
(Mithya’s Capital Account transferred to her executor 

account)

Aug. 1Mithya Executor’s A/cDr.4,200
To Cash A/c4,200
(Cash paid to Mithya’s executor)

 

Mithya Executor’s Account
Dr.Cr.
DateParticularsJ.F.Amount 

DateParticularsJ.F.Amount 

20152015
Aug. 1 

2016

Bank4,200Aug. 1 

2016

Mithya’s Capital A/c28,600
Jan. 31Bank (6,100 + 1220)7,320Jan. 31Interest (24,400×10100×612)(24,400×10100×612)1,220
Mar. 31Balance c/d18,605Mar. 31Interest (18,300×10100×212)(18,300×10100×212)305
30,12530,125
20162016
July 31 

2017

Bank (6,100 + 305 + 610)7,015April 01 

July 31

2017

Balance b/d 

Interest (18,300×10100×412)(18,300×10100×412)

18,605 

610

Jan. 31Bank (6,100 + 610)6,710Jan. 31Interest (12,200×10100×612)(12,200×10100×612)610
Mar. 31Balance c/d6202Mar. 31Interest (6,100×10100×212)(6,100×10100×212)102
19,92719,927
20172017
July 31Bank (6,100 + 102 + 203)6,405April 01Balance b/d6,202
July 31Interest (6,100×10100×412)(6,100×10100×412)203
6,4056,405

 

Balance Sheet 

As on August 31, 2015

LiabilitiesAmount 

AssetsAmount 

Creditors14,000Investments10,000
Mithya’s Executor’s Loan A/c24,400Premises25,000
Partners’ Capital A/cMachinery25,000
Nithya27,125Stock13,000
Sathya28,27555,400Debtors8,000
Patents8,000
Bank (8,000 – 4,200)3,800
Profit and Loss (Suspense)1,000
93,80093,800

 

Working Notes:

 

1.

Partners’ Capital Accounts
Dr.Cr.
ParticularsNithyaSathyaMithyaParticularsNithyaSathyaMithya
Goodwill2,5001,5001,000Balance b/d30,00030,00020,000
Mithya’s Capital A/c4,3752,625Revaluation A/c1,000600400
Mithya’s Executor’s A/c28,600Reserve Fund3,0001,8001,200
Balance c/d27,12528,275Profit and Loss A/c (Suspense)1,000
Nithya’s Capital A/c4,375
Sathya’s Capital A/c2,625
34,00032,40029,60034,00032,40029,600

 

2. Mithya’s Share of Profit:

Previous year’s profit × Proportionate Period × Share of Profit
Chp 4-48

 

3. Mithya’s share of Goodwill

Goodwill of a firm = Average Profit × Number of Year’s Purchase

Chp 4-49

Chp 4-50

Chp 4-51

 

4. Gaining Ratio = New Ratio – Old Ratio

Chp 4-52

Chp 4-53

Gaining Ratio between Nithya and Sathya = 5:3



 

Concepts covered in this chapter –

 

  • Ascertaining the amount due to retiring or deceased partner
  • New profit sharing ratio
  • Gaining ratio
  • Treatment of Goodwill
  • Adjustment of partner’s capital
  • Death of a partner

Conclusion

NCERT solutions for class 12 Accountancy chapter 4 – Reconstitution Of A Partnership Firm – Retirement/Death Of A Partner provides a wide degree of illustrative examples; which assists the students to comprehend and learn quickly. The above mentioned are the illustrations for class 12 CBSE syllabus.