Chapter reconstitution-of-a-partnership-firm-retirement-death-of-a-partner: Reconstitution of a Partnership Firm – Retirement/Death of a Partner Application Questions | accountancy Class 12 CBSE

Chapter reconstitution-of-a-partnership-firm-retirement-death-of-a-partner: Reconstitution of a Partnership Firm – Retirement/Death of a Partner Application Questions | accountancy Class 12 CBSE | ByteNotes.in

Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 1

Applied Concept

Asha, Deepti and Nisha are partners sharing profits in the ratio of 3:2:1. Deepti retires from the firm. Asha and Nisha decide to share future profits in the ratio of 3:1. Calculate the gaining ratio of Asha and Nisha.

Gaining Share = New Share – Old Share. Asha's Gaining Share = 3/4 – 3/6 = 9/12 – 6/12 = 3/12 = 1/4. Nisha's Gaining Share = 1/4 – 1/6 = 3/12 – 2/12 = 1/12.
Gaining Ratio of Asha and Nisha = 1/4 : 1/12 = 3:1.
This gaining ratio means Asha gains 3 times as much as Nisha from Deepti's departure; Asha must compensate Deepti for 3/4 and Nisha for 1/4 of the goodwill amount attributable to Deepti.

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Application Question

Hard difficulty • Concept in a practical situation

Hard

Question 2

Applied Concept

Keshav, Nirmal and Pankaj are partners sharing profits in the ratio of 4:3:2. Nirmal retires and goodwill is valued at Rs. 72,000. Keshav and Pankaj share future profits in 5:3. Record the journal entry for goodwill adjustment.

Nirmal's share of goodwill = 3/9 × Rs. 72,000 = Rs. 24,000. Gaining Shares: Keshav = 5/8 – 4/9 = 45/72 – 32/72 = 13/72; Pankaj = 3/8 – 2/9 = 27/72 – 16/72 = 11/72. Gaining Ratio = 13:11.
Amount borne by Keshav = 13/24 × Rs. 24,000 = Rs. 13,000; Amount borne by Pankaj = 11/24 × Rs. 24,000 = Rs. 11,000.
Journal Entry: Keshav's Capital A/c Dr. Rs. 13,000; Pankaj's Capital A/c Dr. Rs. 11,000; To Nirmal's Capital A/c Rs. 24,000 (Nirmal's share of goodwill adjusted in gaining ratio of 13:11).

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Application Question

Hard difficulty • Concept in a practical situation

Hard

Question 3

Applied Concept

Hanny, Pammy and Sunny are partners sharing profits in 3:2:1. Goodwill appears in books at Rs. 60,000. On Pammy's retirement, goodwill is valued at Rs. 84,000. Hanny and Sunny share future profits in 2:1. Record the necessary journal entries.

Step 1 – Write off old goodwill in old ratio 3:2:1: Hanny's Capital A/c Dr. Rs. 30,000; Pammy's Capital A/c Dr. Rs. 20,000; Sunny's Capital A/c Dr. Rs. 10,000; To Goodwill A/c Rs. 60,000.
Step 2 – Pammy's share of current goodwill = 1/3 × Rs. 84,000 = Rs. 28,000. Gaining Ratio: Hanny's gain = 2/3 – 3/6 = 1/6; Sunny's gain = 1/3 – 1/6 = 1/6. Gaining Ratio = 1:1.
Step 2 Journal Entry: Hanny's Capital A/c Dr. Rs. 14,000; Sunny's Capital A/c Dr. Rs. 14,000; To Pammy's Capital A/c Rs. 28,000 (Pammy's share of goodwill adjusted in gaining ratio 1:1).

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 4

Applied Concept

Inder, Gajender and Harinder are partners sharing profits in 3:2:1. Inder retires. The Balance Sheet shows General Reserve of Rs. 90,000. Record the journal entry for distributing the general reserve.

General reserves belong to all partners and must be distributed to all partners (including Inder, the retiring partner) in their old profit sharing ratio of 3:2:1.
Inder's share = 3/6 × Rs. 90,000 = Rs. 45,000; Gajender's share = 2/6 × Rs. 90,000 = Rs. 30,000; Harinder's share = 1/6 × Rs. 90,000 = Rs. 15,000.
Journal Entry: General Reserve A/c Dr. Rs. 90,000; To Inder's Capital A/c Rs. 45,000; To Gajender's Capital A/c Rs. 30,000; To Harinder's Capital A/c Rs. 15,000 (Reserve distributed in old profit sharing ratio on Inder's retirement).

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 5

Applied Concept

Maira, Shabnam and Vipul share profits in 5:4:1. Profit for the year ending March 31, 2019 was Rs. 1,00,000. Vipul retires on June 30, 2019. Calculate Vipul's share of profit for the intervening period.

Vipul's share of profit for the intervening period is calculated as: Previous Year's Profit × Proportionate Period × Partner's Share of Profit.
Calculation: Rs. 1,00,000 × (3/12) × (1/10) = Rs. 1,00,000 × 3/12 × 4/10... Correcting: Vipul's profit sharing ratio = 1/10. Proportionate period = 3 months (April–June) out of 12. Share = Rs. 1,00,000 × 3/12 × 1/10 = Rs. 2,500.
Journal Entry: Profit and Loss Suspense A/c Dr. Rs. 2,500; To Vipul's Capital A/c Rs. 2,500 (Vipul's share of profit for the intervening period April 1 to June 30, 2019).

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Application Question

Hard difficulty • Concept in a practical situation

Hard

Question 6

Applied Concept

P, Q and R are partners sharing profits in 3:2:1. R retires. After all adjustments, R's capital account shows a balance of Rs. 60,000. P and Q agree to pay R Rs. 75,000 in full settlement. Record the journal entry for the hidden goodwill.

The excess amount paid to R over his adjusted capital = Rs. 75,000 – Rs. 60,000 = Rs. 15,000. This excess is treated as R's share of hidden goodwill.
R's share of goodwill = Rs. 15,000. Since P and Q share profits in 3:2 (their old ratio, assuming no change), this amount is debited to P and Q in gaining ratio of 3:2.
Journal Entry: P's Capital A/c Dr. Rs. 9,000; Q's Capital A/c Dr. Rs. 6,000; To R's Capital A/c Rs. 15,000 (R's share of hidden goodwill adjusted in P and Q's gaining ratio of 3:2).

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 7

Applied Concept

Mohit, Neeraj and Sohan are partners sharing profits in 2:1:1. Neeraj retires. The new firm's total capital is fixed at Rs. 1,20,000. After adjustments, Mohit's capital is Rs. 82,000 and Sohan's is Rs. 41,000. Calculate cash to be brought in/paid off and pass journal entries.

New Profit Sharing Ratio between Mohit and Sohan = 2:1. Mohit's new required capital = 2/3 × Rs. 1,20,000 = Rs. 80,000. Sohan's new required capital = 1/3 × Rs. 1,20,000 = Rs. 40,000.
Mohit's existing capital (Rs. 82,000) > Required (Rs. 80,000): Mohit withdraws Rs. 2,000. Sohan's existing capital (Rs. 41,000) > Required (Rs. 40,000): Sohan withdraws Rs. 1,000.
Journal Entry: Mohit's Capital A/c Dr. Rs. 2,000; Sohan's Capital A/c Dr. Rs. 1,000; To Cash A/c Rs. 3,000 (Excess capital withdrawn by Mohit and Sohan to fix new firm's capital at Rs. 1,20,000).

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 8

Applied Concept

Asha, Deepa and Lata share profits in 3:2:1. Deepa retires. After all adjustments, Asha's capital is Rs. 1,60,000 and Lata's is Rs. 80,000. New profit sharing ratio = 3:1. Calculate new capitals and record journal entries.

Total Capital of New Firm = Rs. 1,60,000 + Rs. 80,000 = Rs. 2,40,000. Asha's new capital = 3/4 × Rs. 2,40,000 = Rs. 1,80,000. Lata's new capital = 1/4 × Rs. 2,40,000 = Rs. 60,000.
Asha's existing capital (Rs. 1,60,000) < Required (Rs. 1,80,000): Asha brings in Rs. 20,000. Lata's existing capital (Rs. 80,000) > Required (Rs. 60,000): Lata withdraws Rs. 20,000.
Journal Entries: Bank A/c Dr. Rs. 20,000; To Asha's Capital A/c Rs. 20,000 (cash brought by Asha). And: Lata's Capital A/c Dr. Rs. 20,000; To Bank A/c Rs. 20,000 (surplus capital withdrawn by Lata).

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 9

Applied Concept

Amrinder, Mahinder and Joginder are partners. Mahinder retires; Rs. 60,000 is due to him. He is to be paid in four yearly instalments plus interest @ 12% p.a. on unpaid balance. Prepare Year 1 and Year 2 entries in his Loan Account.

Year 1: Opening Balance = Rs. 60,000. Interest = 12% × 60,000 = Rs. 7,200. Principal instalment = 60,000/4 = Rs. 15,000. Total payment = Rs. 22,200. Closing Balance = Rs. 60,000 + Rs. 7,200 – Rs. 22,200 = Rs. 45,000.
Year 2: Opening Balance = Rs. 45,000. Interest = 12% × 45,000 = Rs. 5,400. Payment = Rs. 15,000 + Rs. 5,400 = Rs. 20,400. Closing Balance = Rs. 45,000 + Rs. 5,400 – Rs. 20,400 = Rs. 30,000.
Each year, the interest is credited to the Loan Account and the bank payment is debited. The balance reduces each year and the loan is fully cleared after four instalments. Entries: Interest A/c Dr. To Loan A/c; Loan A/c Dr. To Bank A/c.

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Application Question

Hard difficulty • Concept in a practical situation

Hard

Question 10

Applied Concept

Anil, Bhanu and Chandu share profits in 5:3:2. Anil dies on October 1, 2017. Previous year's profit was Rs. 15,000. Interest on capital is provided at 10% p.a. on Anil's capital of Rs. 30,000. Calculate profit share and interest on capital for the intervening period (April 1 to October 1, 2017).

Intervening period = 6 months (April 1 to October 1, 2017). Anil's profit share = Previous year's profit × Proportionate period × Anil's ratio = Rs. 15,000 × 6/12 × 5/10 = Rs. 3,750.
Interest on Capital = Rs. 30,000 × 10/100 × 6/12 = Rs. 1,500.
Journal Entries: (i) Profit and Loss Suspense A/c Dr. Rs. 3,750; To Anil's Capital A/c Rs. 3,750; (ii) Interest on Capital A/c Dr. Rs. 1,500; To Anil's Capital A/c Rs. 1,500. Both amounts form part of the total dues to Anil's executors.

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Chapter reconstitution-of-a-partnership-firm-retirement-death-of-a-partner: Reconstitution of a Partnership Firm – Retirement/Death of a Partner | Application Questions

Asha, Deepti and Nisha are partners sharing profits in the ratio of 3:2:1. Deepti retires from the firm. Asha and Nisha decide to share future profits in the ratio of 3:1. Calculate the gaining ratio of Asha and Nisha.

Keshav, Nirmal and Pankaj are partners sharing profits in the ratio of 4:3:2. Nirmal retires and goodwill is valued at Rs. 72,000. Keshav and Pankaj share future profits in 5:3. Record the journal entry for goodwill adjustment.

Hanny, Pammy and Sunny are partners sharing profits in 3:2:1. Goodwill appears in books at Rs. 60,000. On Pammy's retirement, goodwill is valued at Rs. 84,000. Hanny and Sunny share future profits in 2:1. Record the necessary journal entries.

Inder, Gajender and Harinder are partners sharing profits in 3:2:1. Inder retires. The Balance Sheet shows General Reserve of Rs. 90,000. Record the journal entry for distributing the general reserve.

Maira, Shabnam and Vipul share profits in 5:4:1. Profit for the year ending March 31, 2019 was Rs. 1,00,000. Vipul retires on June 30, 2019. Calculate Vipul's share of profit for the intervening period.

P, Q and R are partners sharing profits in 3:2:1. R retires. After all adjustments, R's capital account shows a balance of Rs. 60,000. P and Q agree to pay R Rs. 75,000 in full settlement. Record the journal entry for the hidden goodwill.

Mohit, Neeraj and Sohan are partners sharing profits in 2:1:1. Neeraj retires. The new firm's total capital is fixed at Rs. 1,20,000. After adjustments, Mohit's capital is Rs. 82,000 and Sohan's is Rs. 41,000. Calculate cash to be brought in/paid off and pass journal entries.

Asha, Deepa and Lata share profits in 3:2:1. Deepa retires. After all adjustments, Asha's capital is Rs. 1,60,000 and Lata's is Rs. 80,000. New profit sharing ratio = 3:1. Calculate new capitals and record journal entries.

Amrinder, Mahinder and Joginder are partners. Mahinder retires; Rs. 60,000 is due to him. He is to be paid in four yearly instalments plus interest @ 12% p.a. on unpaid balance. Prepare Year 1 and Year 2 entries in his Loan Account.

Anil, Bhanu and Chandu share profits in 5:3:2. Anil dies on October 1, 2017. Previous year's profit was Rs. 15,000. Interest on capital is provided at 10% p.a. on Anil's capital of Rs. 30,000. Calculate profit share and interest on capital for the intervening period (April 1 to October 1, 2017).

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