CLASS XII

ACCOUNTANCY
RETIREMENT OF A PARTNER
Q1. Arjun, Bheem and Nakul are partners sharing profits and losses in the ratio of 14 : 5 : 6 respectively.
Bheem retires and surrenders his 5/25th share in favour of Arjun. The goodwill of the firm is valued at 2
years purchase of super profits based on average profits of last 3 years. The profits of the last three years are
₹ 50,000, ₹ 55,000 and ₹ 60,000 respectively. The normal profits of the similar firms are ₹ 30,000.
Goodwill already appears in the books of the firm at ₹ 75,000. The profit for the first year after the Bheem’s
retirement was ₹ 1,00,000. Give necessary journal entries to adjust goodwill and distribute profits showing
your workings.
Q2. Lalit, Madhur and Neena were partners sharing profits as 50%, 30% and 20% respectively. On 31st
March, 2013 their balance sheet was as follows

On this date, Madhur retired and Lalit and Neena agreed to continue on the following terms
(i) The goodwill of the firm was valued at ₹ 51,000.
(ii) There was a claim for workmen’s compensation to the extent of ₹ 6,000.
(iii) Investments were brought down to ₹ 15,000.
(iv) Provision for bad debts was reduced by ₹ 1,000.
(v) Madhur was paid ₹ 10,300 in cash and the balance was transferred to his loan account payable in two
equal instalments together with interest @ 12% per annum.
Prepare revaluation account, partners capital accounts and Madhur’s loan account till the loan is finally paid
off.
Q3. X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2009, X retires
from the firm, Y and Z agrees that the capital of the new firm shall be fixed at ₹ 2,10,000 in the profit
sharing ratio. The capital accounts of Y and Z after all adjustments on the date of retirement showed
balances of ₹ 1,45,000 and ₹ 63,000 respectively. State the amount of actual cash to be brought in or to be
paid to the partners.
Q4. X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2009, Y retires
form the firm. X and Z agree that the capital of the new firm shall be fixed at ₹ 2,10,000 in the profit sharing
ratio. The capital accounts of X and Z after all adjustments on the date of retirement showed balances of ₹
1,45,000 and ₹ 63,000 respectively. State the amount of actual cash to be brought in or to be paid to the
partners.
Q5. Sameer, Yasmin and Saloni were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 3. On
31st March, 2016, their balance sheet was as follows
On the above date, Sameer retired and it was agreed that
(i) Debtors of ₹ 4,000 will be written-off as bad debts and a provision of 5% on debtors for bad and doubtful
debts will be maintained.
(ii) An unrecorded creditor of ₹ 20,000 will be recorded.
(iii) Patents will be completely written-off and 5% depreciation will be charged on stock, machinery and
building.
(iv) Yasmin and Saloni will share the future profits in the ratio of 3 : 2.
(v) Goodwill of the firm on Sameer’s retirement was valued at ₹ 5,40,000.
Pass necessary journal entries for the above transactions in the books of the firm on Sameer’s retirement.
Q6. J, H and K were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2015 their
balance sheet was as follows

On the above date, H retired and J and K agreed to continue the business on the following terms
(i) Goodwill of the firm was valued at ₹ 1,02,000.
(ii) There was a claim of ₹ 8,000 for workmen’s compensation.
(iii) Provision for bad debts was to be reduced by 12,000.
(iv) H will be paid ₹ 14,000 in cash and the balance will be transferred in his loan account which will be
paid in four equal yearly instalments together with interest @ 10% per annum.
(v) The new profit sharing ratio between J and K will be 3 : 2 and their capitals will be in their new profit
sharing ratio. The capital adjustments will be done by opening current accounts.
Prepare revaluation account, partners capital accounts and balance sheet of the new firm.
Q7. L, M and N were partners in a firm sharing profits in the ratio of 2 : 1 : 1. On 1st April, 2013 their
balance sheet was as follows
On the above date, N retired. The following were agreed
(i) Goodwill of the firm was valued at ₹ 6,00,000.
(ii) Land was to be appreciated by 40% and building was to be depreciated by ₹ 1,00,000.
(iii) Furniture was to be depreciated by ₹ 30,000.
(iv) The liabilities for workmen’s compensation fund was determined at ₹ 1,60,000.
(v) Amount payable to N was transferred to his loan account.
(vi) Capitals of L and M were to be adjusted in their new profit sharing ratio and for this purpose current
accounts of the partners will be opened.
Prepare revaluation account, partner’s capital accounts and the balance sheet of the new firm.
Q8. Kushal, Kumar and Kavita were partners in a firm sharing profits in the ratio of 3 : 1 : 1. On 1st April,
2012 their balance sheet was as follows

On the above date, Kavita retired and the following was agreed
(i) Goodwill of the firm was valued at ₹ 40,000.
(ii) Land was to be appreciated by 30% and building was to be depreciated by ₹ 1,00,000.
(iii) Value of furniture was to be reduced by ₹ 20,000.
(iv) Bad debts reserve is to be increased to ₹ 15,000.
(v) 10% of the amount payable to Kavita was paid in cash and the balance was transferred to her loan
account.
(vi) Capitals of Kushal and Kumar will be in proportion to their new profit sharing ratio. The surplus/deficit,
if any in their capital accounts will be adjusted through current accounts.
Prepare revaluation account, partner’s capital accounts and balance sheet of Kushal and Kumar after
Kavita’s retirement.