ACCOUNTANCY

FOR PUC IIND

YEAR

MODULE 4: Retirement of a
Partner

Retirement of a Partner
Accounting Procedure at The Time Of Retirement Of A Partner
The following problems arise when a partner retires from the firm and remaining partners continue
with the business:
1.

Treatment of goodwill

2.

Revaluation of assets and liabilities

3.

Adjustments of accumulated reserve and losses

4.

Calculating the amount due to the retiring partner and its payment.

Treatment of Goodwill
When a partner retires from the firm remaining partners are benefitted because future profit is
shared only by them. For example, if A, B and C are partners and their profit sharing ratio is 2 : 2: 1. If
B retires from the firm, A and C will distribute the profits in 2:1 ratio or a new ratio.
A and C will get share of B. Hence, A and C will compensate the retiring partner B in the gaining ratio.
When a new partner is admitted in the firm, he pays the amount of goodwill and if a partner retires
from the firm, the remaining partners compensate the retiring partner by paying for the goodwill.
Gaining ratio is the difference of new ratio and old ratio. If there is no other agreement, remaining
partners will share the profits in the same ratio in which they shared earlier before the retirement of
a partner. In such a situation, the gaining ratio of the remaining partners would be their old ratio.
Adjustment of Goodwill
The following are the methods of treating goodwill in books in case of retirement :
1.When Goodwill account is raised with full value: Under this method, Goodwill Account is debited
with full value of Goodwill and the partners Capital Accounts, including retiring partners Capital
Account are credited in the old ratio. Goodwill will be show in the Balance Sheet at full value.
2.When goodwill account is raised with full value and written off by remaining partners: Under this
method, first of all Goodwill Account is debited with full value and all partners (including retiring
partner) Capital Accounts are credited in the old ratio. Secondly, remaining partners
Capital Accounts are debited in new ratio and Goodwill Account is credited. Hence, the Goodwill
Account is closed. It will be shown in Balance Sheet.
3.When goodwill is raised only with the share of the retiring partner and then written off by
remaining partners: In this case, firstly Goodwill Account is debited and retiring partners Capital
Account is credited with his share of goodwill. Secondly, Capital Accounts of remaining partners are
debited in their gaining ratio and Goodwill Account is credited. Hence, Goodwill Account will be
closed.

VIJAYENDRA LAD

ACCOUNTANCY
FOR PUC IIND
YEAR

MODULE 4: Retirement of a
Partner

4. When retiring partners share of Goodwill is to be adjusted in the Capital Accounts of remaining
partners without raising Goodwill Account: In this case, the retiring partners share of goodwill is
calculated and debited to continuing partners Capital Accounts in their gaining ratio with
corresponding credit being given to retiring partners Capital Account.

Problems
1. Joythi,Vijaya and Kavita were partners sharing profits and losses in the proporition of
,1/3,1/6/,respectively.Joythi retires.Vijay and Kavita decided to share profits in future in the ratio
of 5:3.Find out the gain ratio.
2. Xand Y&Z were partners sharing profits in the r profits in the ratio of 4:3:2,Mr.Z retired and the
remaing partners agreed to share equally in future.Calculate the Benift Ratio.
3. Bharat ,Rajat,and Sharat are partners sharing profits in the ratio of 4:3:2.Rajat retires from the
business.The new profit sharing ratio of Bharat and Sharat becomes 5/8 and 3/8 respectively.Find
out the Gain ratio of the remaining partners.
4.Dog,Mouse and Cat are partners in a firm who shared profit and loss in the ratio of 3:2:1.Mouse
retires.Calculate the new ratio and ROB.
5 .M/s. Suresh,Naresh and Rajesh were partners sharing profits and losses in the ratio of
2:2:1.Suresh retires.His share in the business is absorbed by Naresh and Rajesh in the ratio of
5:3.Find out the new profit sharing ratio of the remaining partners.
6.Lazy,Dull and Nasty are partners sharing profit and losses in the ratio of 2:2:1.Lazy retires.His
share is taken by Dull and Nasty in the ratio of 3:2.Calculate the new profit sharing ratio of the
remaing partners.
7. A,B & C were partners sharing profits in the proportion of ,1/3 & 1/6 respectively.A retires from
the business.B and C decided to continue as equal partners.Calculate the benefit ratio.
8.Bavya,Divya and Kavya are partners sharing profits in the ratio of 3:2:1 respectively.divya retires
and her share is purchased by Bhavya and kavya 1/4th and 1/12th respectively.
9)A,B and C are partners in a firm sharing profits and losses in the ratio of 2:2:1.You are required to
calculate gain ratio,A)when A retires B)when B retires and C)when C retires.
10)X,Y,Z are partners sharing profits and losses in the ratio of 5:3:2.Calculate gain ratio,A)when
Xretires B)when Y retire and C)When Z retires,.
11)M,N, O are partners sharing profits and losses in the ratio of 5:3:2,N retires from the business.M
and O share future in the ratio of 5/8 and 3/8 respectively.find out gain ratio of M and O.
12)P ,Q,R are partners sharing profits in the ratio proporation of ,1/3 and 1/6 respectively.P retired
due to illness.Q and R decided to Continue as equalpartners.Calculate their benfit ratio.

VIJAYENDRA LAD

ACCOUNTANCY
FOR PUC IIND
YEAR

MODULE 4: Retirement of a
Partner

13)Sun Moon and Star were partners sharing profits and losses in the ratio of 4:3:2.Moon retires
from the partnership ,the new frofit sharing ratio of Sun And star is 5:3.Find out their gain ratio.
14) Sea River and Canal are partners sharing profits and losses in the proporation of 4:3:2
respectively.Canal retires the remaining partners share the future profits equally.Calculate the gain
ratio.
15)Praksh,Baskar and Kiran are partners,sharing profits and losses in the ratio of 5:4:3.Calculate the
profit sharing ratio,A)Praksh retires B)Baskar retires and C)Kiran retire.
16)Reena,Meena and Teena are partners in a firm sharing profits and losses in the ratio of ,1/8 and
10/16 respectively.Calculate the new profit sharing ratio if A)Reena retires B)Meena retires and
C)Teena retires.
17)Zaheer,Ameen and Sikandar are partners,sharing profits in the ratio of 3:2:1.Sikandar retires and
his share is gained by Zaheer and Ameen in theratio of 1/8 and 1/24 respectively.Calculate the profit
sharing ratio.
18)X,Y and Z are partners sharing profits and losses in the ratio 2:1:1.Y retired and his share is taken
over by X and Z in the proportion of 1/9 and 1/18.Calculate the new profit sharing rtaio.
19)Ramesh ,Praksh,Suresh and Dinesh are partners sharing profits and losses in the rartio of
3:2:1:4.Ramesh retires and is acquired by Praksh and Suresh in the ratio of 3:2.Calculate the new
profits sharing ratio of the remaining partners.
20)A,B,C and D were partners sharing profits in the ratio of 5:4:3:2.A retires from the business and
his share is acquired by B and C equally. Calculate the new profit sharing ratio.
21) .Sudarshan,Aravind and Gopal were partners sharing profits and losses in the ratio of 5:2:1
respectively. Their Balance on 31-12-2006 was as follows.
Liabilities
Rs
Sundary Creditors 30,000

Assets
Cash at Bank

Rs.
10,000

General Reserve

Bills Receivable

15,600

S. Debtors
40,000
Less: Reserve
1,600
Stock
P & L A/c
Plant and Machinery

38,400

Capital A/c
Sudarshan
Aravind
Gopal

8,000

50,000
20,000
30,000
4,000
20,000
50,000
1,38,000
1,38,000
Gopal retired.The following adjustments are to be made:
1) Stock to be appreciated by 10%
2) Reserve for doubtful debts to be brought upto 5% on debtors.
3)outstanding repairs to be provided Rs.500

VIJAYENDRA LAD

ACCOUNTANCY
FOR PUC IIND
YEAR

MODULE 4: Retirement of a
Partner

4)Goodwill of firm was to be valued at 56,000

Show Revaluation A/c.Partners Capital Accounts, Goodwill A/c and Balance Sheet of the new firm.
22) .Radha,Sudha and Tara are partners in a Sharing profits and losses in the ratio of 2:2:1
The Balance Sheet of the firm as on 31-12-2006 was as follows:
Liabilities
Creditors

Rs
12,000

Assets
Cash in hand

Rs.
1,000

Profit and Loss A/c 7,500

cash at Bank

6,000

Capital Accounts

Debtors

15,000

Radha
Sudha

16,000
12,000

Tara

10,000
57,500

Stock
16,000
plant &Machinery 19,500

57,500

Mrs.Tara retired on 31-12-2006 on the following terms:

a)The goodwill of the firm is to be valued at Rs.15,000
b)Plant and Machinery is to be depreciated by 4%
c)Stock is to be appreciated by 10%.
d)A bad debts reserve is to be created @5% on Debtors and a 2%reserve is to be created
against Creditors.
partners.
23)Nitin,Sachin and Praveen were partners sharing profits and losses in the ratio of 3:2:1.
The firm Balance Sheet as on 31st December ,2006 was as follows.
Liabilities

Rs.

Creditors
Bills payable

26,000
4,000

Profit and Loss A/c

Capitals
Nitin
Sachin
Praveen

6,000

Assets

Rs.

Bank
Debtros16,000
Less:Reserve 500
Stock
Motor Car
Machinery
Building

2,500
15,500
25,000
8,000
35,000
50,000

50,000
30,000
20,000
1,36,000
1,36,000
Sachin retires on the above date and the following adjustments are made:

VIJAYENDRA LAD

ACCOUNTANCY
FOR PUC IIND
YEAR

MODULE 4: Retirement of a
Partner

1)Goodwill of the firm valued at RS.15,000.

2)Machinery and Motor car were to be reduced by 10% and 5% respectively.
3)Stock and Building were to be appreciated by 20% and 10% respectively.
4)The Reserve against Debtors is to be raised by Rs.1,000.
Assuming that goodwill account was to be written off after Sachins retirement,prepare P &L adj
account ,Capital account and the Balance Sheet of the new firm.
24) Amani,Bharani and Chandini are partners in a firm sharing profits and losses in the ratio of
4:3:2.Their Balance Sheet was as follows on 31-12-2006.
Liabilities
Rs.
Creditors
11,000
Bills Payable
10,000
Reserve Fund 9,000

Assets
Rs.
Land
25,000
Machinery 10,000
Stock
9,000

Capitals
Bharani
Amani
Chandini

Cash
20,000
10,000
8,000
68,000
Bharani retires on the above date:

3,000

68,000

Following adjustments are to be made on her retirement:

a)goodwill of the firm was agreed at Rs18,000
b)Machinery was depreciated by 10%
c)Stock to be valued at Rs 7,000
d)Bad Debts written off Rs.1,000
e)Rent payable Rs.500.
Prepare Revaluation A/c,Partners capital A/cs and balance Sheet of the continuing partners.
25. Anna,Monnaand Kanna were sharing profits in the ratio of 3:2:1 respectively.
Liabilities
Capital
Anna
Monna
Kanna
Reserve Fund
Creditors

Rs.

Assets
Cash in hand
Debtros
Stock
Motor Van
Machinery
Buildings

Rs.
2,500
40,000
15,500
30,000
25,000
25,000
8,000
12,000
35,000
24,000
45,000
1,31,000
1,31,000
Monna retires on the above date and the following adjustments were made:

VIJAYENDRA LAD

ACCOUNTANCY
FOR PUC IIND
YEAR

MODULE 4: Retirement of a
Partner

!)Monnas share of goodwill was valued at Rs.6,000.It was decided to write off the goodwill.
!!)Machinery and Motor vans were reduced by 10% and 5% respectively.
!!!)Stock and Building were appreciated by 20% and 10% respectively.
!V)The provision on debtors was to be created at Rs1,100 for bad debts.
Prepare Revaluation Account,Capital Accounts and Balance Sheet of the continuing partners.
26. Mr.Ram a ,Mr.Raja and Mr. Gopal were partners sharing Profits and Losses in the ratio of 3:2:1
respectively,their Balance sheet as on 31-12-2006 was as follows:
Liabilities
Sundry Creditors
Bills Payable
Capitals
Mr.Rama
Mr.Raja
Mr.Gopal

Rs.
15,000
5,000

Assets
Bank
Bills Receivable
Investments
.10,000
Sundry Debtors
10,000
Buildings
Rs.10,000 Stocks
50,000

RS
3,500
2,000
6,500
6,000
27,000
5,000
50,000

Mr.Gopal retired on the date and the partners agreed that:

a)Goodwill be Calculated on the basis of 2 years profit of the avrege of the proceedings 3 years
profits.
The profits for the 3 years were Rs.10,000/;rs.12,000/-and 14,000/-respectively.
b)Rs.510 be provided for Doubtful Debts.Stocks be depreciated bu 10%and Buildings be appreciated
by 5%.
Show the Revalution Account Partners Capital Account and Balance Sheet after retirement.if
1)Goodwill is raised at its full value
2)To the extent of Gopals Share .
27) The following was the Balance Sheet of M/s Joythi,preeti and Rathi as on 1-1-2006
Balance Sheet as on 1-1-2006
Liabilities
S.Crs
Bank overdraft
Res.Fund

Rs
10,000
20,000
18,000

Cap.A/cs
Joythi
Preeti

30,000
40,000

Assets
Cash
Stock
S.Drs
40,000
Less:RDDR 1,000
B/R
Patents
Furniture

Rs.
10,000
25,000
39,000
11,000
10,000
20,000

VIJAYENDRA LAD

ACCOUNTANCY
FOR PUC IIND
YEAR

MODULE 4: Retirement of a
Partner

Rathi
P&L A/c

50,000
Plant and Machinery 29,000
6,000
Buildings
30,000
1,74,000
1,74,000
On the above date Rathi retired from the business and the following revaluations agreed upon by
the partners.
!)Depreciate Furniture &Plant Machinery by 10%
!!)Maintain RDD at 5%
!!!)Appreciate Building by 20%
!V)Interest on Bank overdraft at 20% per annum was outstandings for 9 Months.
V) Goodwill of the business was to be valued at three times of the average profit for the
Last five years.
2001-Rs.10,000(Loss),2002-Rs.25,000(Profit),2003-rs.30,000(profit),2004-Rs.15,000(Loss)
2005-Rs.20,0009profit)
V!)Outstanding rent Rs.100/Prepare necessary Ledger accounts and show the Balance sheet of the continuing Partners.
28) Sadhu,Sanyasi and Samasari were partners,sharing Profits and losses in the ratio of 5:2:1
respectively.Their BalanceSheet as on 31-12-2006
Liabilities
Sundry Creditors

Rs
30,000

Assets
Cash at Bank

Rs
14,000

General Reserve 8,000

Bills Receivable

15,600

Capital Accounts
Sadhu
Sanyasi

Sund Debtors 40,000 less:Reserve

Stock
Machinery

50,000
30,000

20,000
1,38,000
Samsari retired and the following adjustments to be made:

1,600 38,400
20,000
50,000

Samsari

1,38,000

1)Stock to be appreciated by 10%

2)machinery to be depreciated by 5%
3)Goodwill of the firm was valued at Rs.16,000
4)the new PSR between Sadhu and Sanyasi is agreed as 5:3
5)The capital of the newly constituted firm was decided to be Rs.80,000 and to be in Proportion to
their profit sharing (Adjustment to be made in cash)

VIJAYENDRA LAD

ACCOUNTANCY
FOR PUC IIND
YEAR

MODULE 4: Retirement of a
Partner

29 ) Hari,Girl and Suri were partners sharing profits and losses in the ratio of 5:2:1 respectively.Their
Balance sheet as on 31.3.2013 was as under:
Liabilities
Creditors
Bills payable
Reserve Fund
Capitals:
Hari
Giri
Suri

Amount Amount
15,000
9,000
16,000

Assets
Amount Amount
Cash at bank
5,000
Bills receivable
12,600
Debtors
30,000
Less:Reserve
1,6000 28,400
50,000
Stock
20,000
30,000
Machinery
50,000
10,000 90,000
Motor Car
14,000
1,30,000
1,30,000
Suri retired.The following Adjustments are to be made:

2)Reserve for doubtfull debts to be brought up to 10% on debtors.

3)Machinery and Motor car depreciated by 5% and 10% respectively.
4)Outstanding power charge to be provided for rs 1,100.
5)ZGoodwill of the firm was raised for Rs.35,000 and it has to be written off immediately after Suris
retirement.
30. Father and Mother and Son arepartners sharing profits and losses in the ratio of 2:2:1.On the
31.3.2014,their balance sheet was as under:
Liabilities
Capitals
Father
Mother
Son
Sundary creditors
Bills payble
Outstandin Expence
P &L A/c.

Amount Amount
45,000
35,000
20,000

Assets
Amount Amount
Bank
15,200
Furniture
8,000
Plant
36,000
Sundary Debtors
24,000
Stock
22,000
Bills Receivable
6,000
Buildings
40,000

1,00,000
17,000
13,000
1,200
20,000
1,51,200
1,51,200
Father retires from business due illness,and the following adjustments are to made:

1)Goodwill of the firm is valued at Rs.30,000,Fathers share of goodwill is to be created and written
of without opening the goodwill account.
2)Furniture and plant to be depreciated by 10% each.
3)Buildings Appreciated by 20%and stock valued at rs 24,000.
4)Maintain reserve for bad debts at 5% on debtors.
5)An item of rs.600 included in creditors,not likely to be claimed and hence should be written off.

VIJAYENDRA LAD

ACCOUNTANCY
FOR PUC IIND
YEAR

MODULE 4: Retirement of a
Partner

6)Settlement made to the retiring partner through bank overdraft.

31) Vanja,Girija and Jalja were partners sharing profits and losses in the ratio of 3:2:1.Their Balance
sheet is on 31.3.2014 was as follows:
Liabilities
Creditors
Bills Payable
General Reserve
Capitals:
Vanaja
Girija
Jalaja
P &L A/c

Amount Amount
32,000
24,000
36,000

Assets
Amount Amount
Cash in hand
24,000
Bills Receivable
22,000
Debtors
42,000
Less:RBD
2,000
40,000
70,000
Stock
38,000
50,000
Furniture
24,000
30,000 1,50,000 Machinery
40,000
6,000
Buildings
60,000
2,48,000
2,48,000
Girija retired due to change of residence and the following adjustments were made:

1)Goodwill of the firm was valued at rs,30,000nd it has to be to be retainrd in the business.
2)RBD increased by rs.1,600.
3)buildings to be Valued at Rs. 62,000 and stock Valued at Rs.36,500.
4)Depreciated Machinery by 10% and Furniture valued at Rs.22,700.
5)An investments not recorded in the books,costing Rs 1,000 has to be taken into account.
6)Girija is to be paid Rs.20,000 immediately after retirement and the balance transferred to her
loan account.
32. ) Following is the Balance sheet of Ramesh , Mahesh and Suresh as on 31.3.2014
Liabilities
Creditors
Bills Payable
Bank loan
Capitals:
Ramesh
Mashesh
Suresh
Reserve fund

Amount Amount
30,000
8,000
14,000
25,000
20,000
15,000

60,000
12,000
1,24,000

Assets
Amount Amount
Cash
5,500
Furniture
10,000
Stock
16,000
Book Debts
28,000
Less :RBD
1,500
26,500
Plant & machinery
25,000
Buildinhs
35,000
P & L A/c
6,000
1,24,000

Suresh retires from the business on 31.3.2014. and the following adjustments are to be made:
1) Depreciated Machinery by 5% and the Stock by 10%.
2) Buildings appreciated by 20% and Furniture valued at rs.12,000
3) RBD increased to Rs.1,750.

VIJAYENDRA LAD

ACCOUNTANCY
FOR PUC IIND
YEAR

MODULE 4: Retirement of a
Partner

4)Interest on bank loan 10% is due for 6 months.

5)Sureshs share of goodwill created for rs.15,000and written off immediately.
6)Retiring partners is to be paid rs.3,900 immediately and the balance in three equally yearly
instllments at 6% interest ,p.a.
33) Uday ,Suvarna and Kasturi were partners sharing profits and losses inproportion of their
capitals.Their Balance sheet as on 31.3.2014 stood as follows:
Liabilities
Capitals:
Udaya
Suvarna
Kasturi
Bills Paybale
Creditors

Amount Amount

Assets
Bank
Investments
Furniture
Stock in trade
Debtors
Buildings
Machinery
P &L A/c

Amount Amount
5,000
60,000
12,000
40,000
15,000
20,000 1,20,000
8,000
26,000
18,000
50,000
40,000
30,000
12,000
1,68,000
1,68,000
On 1.4.2014,Kasturi retired from business,and the following adjustments are required:
1)Goodwill of the firm valued at 3 times the average profits for the last five years.The profits And
losses were:
31.3.2010 profit ofRs 30,000
31.3.2011 loss of Rs 12,000
31.3.2012 profit of Rs 20,000
31.3.2013 loss of Rs 8,000
31.3.2014 profit of 20,000
2) Kasturis share of goodwill is to be created and written off immediately.
3) Buildings and Stock valued at 10% more than the book value and machinery and Furniture valued
at 5% less than the book value.
4)investments valued at 15,700.
5)Bad Debts Rs1,000 and RDD at 5% on Debtors.
34) Shruti Laya and Pallivi are partners sharing profits in the ratio of 2:2:1 respectively.Their balance
sheet as on 31.3.2014 was as follows :
Liabilities
Amount Amount
Sundary Creditors
40,000
Bills Payable
25,000
Reserve
15,000

Assets
Bank
Buildings
Furniture

Amount Amount
25,000
40,000
10,000

VIJAYENDRA LAD

10

ACCOUNTANCY
FOR PUC IIND
YEAR
Capitals:
Shruti
Laya
Pallavi
Outstanding
expenses

MODULE 4: Retirement of a
Partner

15,000
25,000
40,000

80,000
1,200

Investments
Sundary Debtors
Less RBD
Bills receivable
Stock in trade

10,000
35,000
2,800

32,200
20,000
24,000

1,61,200
1,61,200
On the above date, Shruti retires from the business and the following adjustments were made:
1.Goodwill of the firm was raised for Rs 18,000 and written off immediately.
2)buildings valued at 15% more than the book value and Furniture valued at 10% less than book
value.
3)Depreciate Stock by 55 and Investments valued at Rs.12,200.
4)RBD is no longer necessary.
5)Rs 12,000 transferred to Shruti to loan a/c and balance paid by cheque.
35) X,Y and Z were partners sharing profits and losses in the proportion of 2/5,2/5,and 1/5
respectively. Their balance sheet as on 31.3.2014 was as follows:
Liabilities
Creditors
Bills payable
Capitals:
X
Y
Z

Amount Amount Assets

Amount
10,000 Bank
8,000
Debtors
8,000
Less: RBD 250
12,500
Stock
15,000
Machinery
20,000 47,500 Motor Van
Buildings
65,500
Y retires on the above date to the following adjustments

Amount
1,250
7,750
12,500
17,500
4,000
22,500
65,500

1. Goodwiil of the firm isto be valued at rs 9,000 and is to be shown in the Balance sheet of the
continuing partners.
2. Machinery and Motor car Depreciated by 10% and 15% respectively.
3. Reserve for doubtful debts reduced by rs 100%.
4. Stock is to be appreciated by 20% and Buildings by 10%.
5. The total Capital of the firm is fixed at Rs.48,000 between X and Z in their new ratio of 3:2.
For this purpose,actual cash is to be brought in or paid off.
36)A,B and C were partners in a firm sharing profits and losses in the ratio of 5:3:2,their
Balance sheet as on 31.3.2013 was as Follows:
Liabilities
Amount Amount
Trade Creditors
20,000
Bills payable
6,000
General reserve
20,000
Capitals:

Assets
Buildings
Machinery
Stock
Trade debtors

Amount Amount
1,00,000
48,000
18,000
20,000

VIJAYENDRA LAD

11

ACCOUNTANCY
FOR PUC IIND
YEAR
A
B
C

MODULE 4: Retirement of a
Partner
80,000
60,000
40,000

Less:RBD
Investments
Motor Van
Cash

1000

19,000
12,000
1,80,000
15,000
14,000
2,26,000
2,26,000
C decided to retired due to old age. A and B decided that the following adjustments are to
be made:
1) Drepreciated machinery by 10% and appreciated Building by 155.
2) Stock valued at Rs. 10% more than the book value and motor van valued at 55 less than
the book value.
3) Investments valued at Rs. 13,200.
4) Goodwill of the Firm is valued at rs 70,000.Cs share of goodwill adjusted against the
capitals accounts of A and B.
5) Total capital of the firm valued at Rs.1,80,000 and decided to adjust their Capitals in a
new ratio of 2:1.Adjustments to be made in Cash.

37) Ram,Robert and Raheem were partners sharing profits and losses equally. Their Balance sheet as
on 31.3.2013 was as follows:
Liabilities
Creditors
Bills payabale
O/s expenses
Reserve Fund
Capitals:
Ram
Robert
Rahim

Amount Amount
21,000
9,000
2,500
24,000
40,000
30,000
20,000

Assets
Amount Amount
Cash at bank
22,500
Debtors
20,000
Less:Provision
1,000
19,000
Stock
18,000
Plant & Machinery
25,000
Buildings
50,000
P and L A/c
12,000

90,000
1,46,500
1,46,500
Robert retired the business on 31.3.2013 and the following adjustments are to be:

Appreciated building by 10% and depreciared Plant Machinery by 15%.

1) Stock is valued at Rs.15,000.
2) Provision for Bad debts to be increased to rs 2,500 on the Debtors.
3) Outstanding expenses valued At Rs.2,250.
4) Goodwill of the firm is valued at Rs.42,000.Roberts share of goodwill to be created and
written off without opening the goodwill account.
5) Robert is to be paid Rs.10,000 and the transferred to his loan account.
38) Bull and Beer,Stag were partners sharing profits and losses in the ratio of 2:2:1 respectively.On
31.3.2013,their Balance sheet was as given here under:
Liabilities
Amount Amount
S.Creditors
15,000
Bills payable
7,500

Assets
Cash in hand
Bills receivable

Amount Amount
4,000
13,000

VIJAYENDRA LAD

12

ACCOUNTANCY
FOR PUC IIND
YEAR
Bank Loan
Capitals:
Bull
Bear
Stag

MODULE 4: Retirement of a
Partner
12,000

55,000
45,000
25,000

Patents
Sundary debtors 23,000
Less:RBD
3,000
Furniture
1,25,000 Investments
Machinery
Buildings
1,59,500

8,000
20,000
12,500
15,000
25,000
62,000
1,59,500

On the above date, Stag retired from the business due to misunderstanding with other Partners and
the following adjustments are required:
1) Goodwill of the firm valued Rs 50,000.Stags of goodwill is to be created and written off
immediately.
2) Machinery valued at rs.20,500 and Furniture to be valued at 10% less than the book value.
3) Appreciated Buildings by 10% and make a provision for Bills receivable at 5%.
4) Reserve for bad debts reduced by rs 500.
5) Interest on Bnk loan at 5% due for 6 months.
39) Prabhakar, Prakash and Raju were partners in a firm and their Balance sheet as on 31.3.2014 was
as follows:
Liabilities
Creditors
Bank overdraft
Reserve fund
P and L A/c
Capitals:
Prabhakar
Prakash
Raju

Amount Amount
25,000
20,000
30,000
15,000

Assets
Amount Amount
Cash
47,000
Stock
25,000
Debtors
40,000
Less:RBD
1000
39,000
Bills receivable
10,000
30,000
Patents
10,000
40,000
Furniture
20,000
50,000 1,20,000 Machinery
29,000
Buildings
30,000
2,10,000
2,10,000
Of the above,raju retires from the business on 31.3.2014 and the following revaluations were agreed
upon by the partners:
a)Depreciate furniture and Machinery by 10%.
b)Matian reserve for bad debts at 5%on debtors and provision for bills receivable at 5%.
c)Buildings to be valued at 10% more than the book value.
d)Goodwill of the firm valued at rs.30,000,created for its full value and written off immediately.
e)Outstanding rent Rs 1,100
f)Retiring partners is to be paid immediately Rs 36,000 by the continuing partners and the balance
transferred to his loan account.

VIJAYENDRA LAD

13