Practice Questions on Retirement of a Partner Class 12 Accountancy

Practice Questions on Retirement of a Partner

1. Retirement of a partner leads to reconstitution of a partnership. Do you agree? Give reason for your answer. 
2. State any four items which are recorded on the credit side of the retiring partner’s capital a/c.
3. A, B and C are partners sharing profits in the ratio 1/2:1/4:1/4.  What will be the new ratio on the retirement of B?
4. X, Y and Z are partners sharing profits in the ratio 5:4:3. X retires and it is decided that new profit ratio between Y and Z will be same as existing between X and Y. Calculate new ratio and gain ratio.
5. X, Y and Z are partners sharing profits in the ratio 5:3:2. Y retires and he sells his share of goodwill to X for Rs 8000 and to Z for Rs 4000. Find out the new profit sharing ratio and the gain ratio. 
6. X, Y and Z are partners in a firm. Y retires and his claim including his capital and his share of goodwill is Rs 60,000. He is paid in cash and partly in kind. An automobile at Rs 30,000 unrecorded in the books of firm and the balance in cash is given to him to settle his account. Pass the necessary journal entries. 
7. A, B and C are partners sharing profits in the ratio of 5:3:2. B retires and the remaining partners decided to share future profits in 2:3. They also decided to record the effect of the following without affecting their book values: General reserve   Rs 120,000, Contingency reserve Rs 70,000, Profit and Loss A/c (Dr)   Rs 30,000, Advertisement Suspense A/c  Rs 10,000. You are required to give the necessary adjusting entry.
8. A, B and C are partners sharing profits in the ratio of 3:2:1. B retires. On the date of B’s retirement, goodwill was valued at 2 years purchase of super profits. Average profits of the firm were Rs 80,000 and normal profits were Rs 50,000. On that date, there was balance in the general reserve amounting to Rs. 180,000. Pass the necessary entries relating to the goodwill and the reserve.
9. A, B, C and D are partners sharing profits in the ratio of 3:3:2:2. D retires and the remaining partners decided to share future profits in 3:2:1. On the date of D’s retirement, goodwill of firm is valued at Rs 300,000. Goodwill already appearing in the books of accounts was Rs 225,000. Show the necessary journal entries. 
10. A, B and C were partners in a firm sharing profits in 3:2:1. B retired on 31st March 2019  and on that date their balance sheet was as follows 

Liabilities	Amount	Assets	Amount
Capitals: 90,000 60,000 30,000 Creditors General reserve  Workmen Compensation Reserve	180,000 16,600 6000 9000	Debtors       21,000 Less: provision of doubtful debts (1400) Stock  Building Machinery Cash	19,600 19,000 1,00,000 58,000 15000
	58,500		58,500

 Following adjustments were agreed upon for calculation of amount due to B:

a. Goodwill of the firm be valued at Rs 36,000.

b. New profit sharing ratio was decided at 3:1.

c. Provision of doubtful debts is to be increased to 10% of debtors.

d. Included in the value of creditors was Rs 2500 for an outstanding legal claim, which will not arise.

e. B to be paid Rs 9000 immediately and balance to be transferred to his loan A/c. Prepare revaluation a/c, partners’ capital A/c and new balance sheet. 

10. A, B and C were partners in a firm sharing profits in the capital ratios. B retired on 31st March 2019  and on that date their balance sheet was as follows 

Liabilities	Amount	Assets	Amount
Capitals: 18,000 13,500 9000 Creditors Investment fluctuation reserve	40,500 6,900 7500	Debtors       5,000 provision of doubtful debts (100) Stock  Building Investment Cash at bank	4900 8000 25,000 11,500 5500
	54900		54900

 Following adjustments were agreed upon for calculation of amount due to B:

a. Goodwill of the firm be valued at Rs 10,800.

b. New profit sharing ratio was decided at 5:3.

c. Stock to be depreciated by 6%.

d. Provision of doubtful debts is to be increased to 5% of debtors.

e. Building to be appreciated by 20%. 

f. Provision of Rs 770 to be made in respect of outstanding legal charges. 

Prepare revaluation a/c, partners’ capital A/c and new balance sheet.