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12th Standard Accountancy - Retirement and Death of a Partner Three Marks Questions

Published on: 01/10/2019

Retirement and Death of a Partner

Download Tamil Nadu 12th Standard Accountancy question papers, model tests, one-mark questions, important questions, and public exam papers in PDF format. Free study materials and answer keys for TN State Board students.

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Questions:

Generic 3

7 x 3 = 21

Kavin, Madhan and Ranjith are partners sharing profits and losses in the ratio of 4:3:3 respectively. Kavin retires from the firm on 31st December, 2018. On the date of retirement, his capital account shows a credit balance of Rs. 1,50,000. Pass journal entries if:
(a) The amount due is paid off immediately.
(b) The amount due is not paid immediately.
(c) Rs.1,00,000 is paid and the balance in future.

Balu, Chandru and Nirmal are partners in a firm sharing profits and losses in the ratio of 5:3:2. On 31^st March 2018, Nirmal retires from the firm. On the date of Nirmal’s retirement, goodwill appeared in the books of the firm at Rs. 60,000. By assuming fluctuating capital account, pass the necessary journal entry if the partners decide to
(a) write off the entire amount of existing goodwill
(b) write off half of the existing goodwill

Akash, Mugesh and Sanjay are partners in a firm sharing profits and losses in the ratio of 3:2:1. Their balance sheet as on 31^st March, 2017 is as follows:

Liabilities	Rs.	Rs.	Asset	Rs.
Capital accounts:			Buildings	1,10,000
Akash	40,000		Vehicle	30,000
Mugesh	60,000		Stock in trade	26,000
Sanjay	30,000	1,50,000	Debtors	25,000
Profit and loss appropriation A/c		12,000	Cash in hand	15,000
General reserve		24,000
Workmen compensation fund		18,000
Bills payable		2,000
		2,06,000		2,06,000

Pass journal entry to transfer accumlatetd Profit and prepare the capital account of the partners

List out the adjustments made at the time of retirement of a partner in a partnership firm.

Rathna, Baskar and Ibrahim are partners sharing profits and losses in the ratio of 2:3:4 respectively. Rathna died on 31st December, 2018. Final amount due to her showed a credit balance of Rs. 1,00,000. Pass journal entries if,
(a) The amount due is paid off immediately by cheque.
(b) The amount due is not paid immediately.
(c) Rs. 60,000 is paid immediately by cheque.

Justina, Navi and Rithika are partners sharing profits and losses equally. On 31.3.2019, Rithika retired from the partnership firm. Profits of the preceding years is as follows:
2016: Rs. 5,000; 2017: Rs. 10,000 and 2018: Rs. 30,000
Find out the share of profit of Ritika for the year 2019 till the date of retirement if
(a) Profit is to be distributed on the basis of the previous year’s profit
(b) Profit is to be distributed on the basis of the average profit of the past 3 years
Also pass necessary journal entries by assuming that partners’ capitals are fluctuating. Accountancy

Prince, Dev and Sasireka are partners in a firm sharing profits and losses in the ratio of 2:4:1. Their balance sheet as on 31^st March, 2019 is as follows:

Liabilities	Rs.	Rs.	Assets	Rs.
Capital accounts			Buildings	40,000
Prince	30,000		Plant	50,000
Dev	50,000		Furniture	10,000
Sasireka	20,000	1,00,000	Stock	15,000
Profit and loss appropriation A/c		10,000	Debtors	20,000
General reserve		15,000	Cash at bank	15,000
Workmen compensation fund		17,000
Sundry creditors		8,000
		1,50,000		1,50,000

Generic 5

3 x 5 = 15

Vinoth, Karthi and Pranav are partners sharing profits and losses in the ratio of 2:2:1. Pranav retires from partnership on 1^st April 2018. The following adjustments are to be made.
(i) Increase the value of land and building by Rs. 18,000
(ii) Reduce the value of machinery by Rs. 15,000
(iii) A provision would also be made for outstanding expenses for Rs. 8,000.
Give journal entries and prepare revaluation account.

Roja, Neela and Kanaga are partners sharing profits and losses in the ratio of 4:3:3. On 1^st April 2017, Roja retires and on retirement, the following adjustments are agreed upon.
(i) Increase the value of building by Rs. 30,000.
(ii) Depreciate stock by Rs. 5,000 and furniture by Rs. 12,000.
(iii) Provide an outstanding liability of Rs. 1,000
Pass journal entries and prepare revaluation account.

10.

Ramya, Sara and Thara are partners sharing profits and losses in the ratio of 5:3:2. On 1^st April 2018, Thara retires and on retirement, the following adjustments are agreed upon:
(i) Increase the value of premises by Rs. 40,000.
(ii) Depreciate stock by Rs. 3,000 and machinery by Rs. 6,500.
(iii) Provide an outstanding liability of Rs. 500
Pass journal entries and prepare revaluation account.

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Answers Key:

Generic 3

7 x 3 = 21

Journal entries
Date	Particulars		Debit Rs	Credit Rs
2018	(i) Kavin's capital A/c	Dr.	1,50,000
Dec.31	To Bank Ale			1,50,000
	(Amount due paid immediately)
2018	(ii) Kavins capital A/c	Dr	1,50,000
	To Kavins loan A/c			1,50,000
	(Amount due transferred to loan account)
2018	(iii) Kavins capital A/c	Dr	1,50,000
Dee.31	To Bank A/c			1,00,000
	To Kavins loan A/c			50,000
	(Rs 1,00,000 paid and the balance transferred to Ian account)

Journal entry
Particulars		Depit Rs	Credit Rs
Balu's capital A/c	Dr.	30,000
Chandru's capital A/c	Dr	18,000
Nirmal's capital A/c	Dr	12,000
To Goodwill A/c			60,000
(value of goodwill entirely shared to all partners)

Journal entry
Particulars		Debit Rs	Credit Rs
Balus capital Alc	Dr	15,000
Chandru's capital A/c	Dr	9,000
Nirmal's capital A/c	Dr	6,000
To Goodwill A/c			30,000
(Half of the existing goodwill written off)

Journal Entries
Date	Particulars		Debit Rs	Credit Rs
2017	Profit and Loss appropriation A/c	Dr	12,000
March 31	General reserve A/c	Dr	24,000
	Workmen compensation fund	Dr	18,000
	To Akash's capital A/c(54,000 x 3/6)			27,000
	To Mugesh's capital A/c (54,000 x 2/6)			18,000
	To Sanjay's capital A/c ( 54,000 x 116)			9,000
	(Accumulated profits and reserve
	transferred to all partner's capital account
	in the old profit sharing ratio)

Dr Capital Account Cr
Particulars	Akash Rs	Mukesh Rs	Sanjay Rs	Particulars	Akash Rs	Mukesh Rs	Sanjay Rs
To Balance c/d	67,000	78,000	39,000	By Balance b/d	40,000	60,000	30,000
				By Accumulated
				profit and loss A/c	27,000	18,000	9,000

	67,000	78,000	39,000		67,000	78,000	39,000
				By Balance b/d	67,000	78,000	39,000

The following adjustments are necessary at the time of retirement of a partner.
(i) Distribution of accumulated profits, reserves and losses.
(ii) Revaluation of assets and liabilities.
(Hi) Determination of new profit sharing ratio and gaining ratio.
(iv) Adjustment for goodwill.
(v) Adjustment for current year's profit or loss upto the date of retirement.
(vi) Settlement of the amount due to the retiring partner.

Journal entries
Particulars		Debit Rs.	Credit Rs.
(a) Rathna’s Executor A/c	Dr.	1,00,000
To Bank A/c			1,00,000
(Amount due paid immediately)
(b) Rathna’s Executor A/c	Dr.	1,00,000
To Rathna’s Executor loan A/c			1,00,000
(Amount due transferred to loan account)
(c) Rathna’s Executor A/c		1,00,000
To Bank A/c			60,000
To Rathna’s Executor loan A/c			40,000
(Rs. 60,000 paid and the balance transferred to loan account)

(a) If profit is to be distributed on the basis of the previous year’s profit:
Ritika’s share of profit for 3 months \(=30000\times\frac{3}{12}\times\frac{1}{3}=Rs.2,500\)

Date	Particulars		Debit Rs.	Credit Rs.
2019 March 31	Profit and loss Suspense A/c	Dr.	2,500
	To Rithika’s capital A/c			2,500
	(Rithika’s current year share of profit credited to her capital account)

(b) If profit is to be distributed on the basis of the average profit of the past 3 years:
Average profit \(=\frac{5,000+10,000+30,000}{3}\)
= 15,000
Ritika’s share of profit for 3 months \(=15000\times\frac{3}{12}\times\frac{1}{3}=Rs.1,250\)

Date	Particulars		Debit Rs.	Credit Rs.
2019 March 31	Profit and loss Suspense A/c	Dr.	1,250
	To Rithika’s capital A/c			1,250
	(Rithika’s current year share of profit credited to her capital account)

Journal entry
Date	Particulars		Debit Rs.	Credit RS.
2019 March 31	Profit and loss appropriation A/c	Dr.	10,000
	General reserve A/c	Dr.	55,000
	Workmen compensation fund A/c	Dr.	17,000
	To Prince’s capital A/c (42,000 × 2/7)			12,000
	To Dev’s capital A/c (42,000 × 4/7)			24,000
	To Sasireka’s capital A/c (42,000 × 1/7)			6,000
	(Accumulated profits and reserve transferred to allpartners’ capital account in the old profit sharing ratio)

Generic 5

3 x 5 = 15

Journal entries
Date	Particulars		Debit Rs	Credit Rs
2018 April 1	Land and building A/c	Dr	18,000
	To Revaluation A/c			18,000
	(Increase in the value of building accounted)
2018 April 1	Revaluation A/c	Dr.	23,000
	To Machinery A/c			15,000
	To Outstanding expenses A/c			8,000
	(Reduction in the value of machinery
	and outstanding expenses accounted)
2018 April 1	Vinoth's capital A/c	Dr	2,000
	Karthi's capital A/c	Dr.	2,000
	Pranar's capital A/c	Dr	1,000
	To Revaluation A/c			5,000
	(Loss on revaluation transferred to
	capital accounts)

**Dr Revaluation A/c Cr**
Particulars	Rs	Particulars	Rs	Rs
To Machinery A/c	15,000	By Land and building A/c		18,000
To Outstanding expenses A/c	8,000	By Loss on revaluation transferred to
		Vinoth's capital A/c (5,000 x 2/5)	2,000
		Karthi's capital A/c (5,000 x 2/5)	2,000
		Prana's capital A/c (5,000 x 1/5)	1,000
				5,000
	23,000			23,000

Journal entries
Date	Particulars		Debit Rs	Credit Rs
2017	Building A/c	Dr	30,000
April 1	To Revaluation A/c			30,000
	(Value of building inreased)
2017	Revaluation A/c	Dr	18,000
April1	To Stock A/c			5,000
	To Furniture A/c			12,000
	To Outstanding liability A/c			1,000
	(Decrease in value of assets and outstanding liability recorded
2017	Revaluation A/c	Dr	12,000
April1	To Roja's capital A/c			4,800
	To Neela's capital A/c			3,600
	To Kanaga's capital A/c			3,600
	(profit on recaluation distributed)

Dr Revaluation Account Cr
Particulars	Rs	Rs	Particulars	Rs
To Stock A/c		5,000	By Building A/c	30,000
To Furniture A/c		12,000
To Outstanding liability A/c		1,000

To Profit on revaluation transferred to
Roja's capital A/c	4,800
Neela's capital A/c	3,600
Kanaga's capital A/c	3,600
		12,000
		30,000		30,000

10.

Date	Particulars		Debit Rs.	Credit Rs.
2018 April 1	Premises A/c	Dr.	40,000
	To Revaluation A/c			40,000
	(Value of premises increased)
"	Revaluation A/c	Dr.	10,000
	To Stock A/c			3,000
	To Machinery A/c			6,500
	To Outstanding liability A/c			500
	(Decrease in value of assets and outstanding liability recorded)
"	Revaluation A/c	Dr.	30,000
	To Ramya's capital A/c			15,000
	To Sara's capital A/c			9,000
	To Thara's capital A/c			6,000
	(Profit on revaluation distributed)

Dr. Revaluation account Cr.
Particulars	Rs.	Rs.	Particulars	Rs.
To Stock A/c		3,000	By Premises A/c	40,000
To Machinery A/c		6,500
To Outstanding liability A/c		500
To Profit on revaluation transferred to
Ramya's capital A/c (5/10)	15,000
Sara's capital A/c (3/10)	9,000
Thara's capital A/c (2/10)	6,000	30,000
		40,000		40,000