CBSE XII COMPILED BY SUDHIR SINHA

ACCOUNTANCY RETIREMENT OF PARTNER

RETIREMENT OF PARTNER – CBSE QUESTION BANK

1 L, M and N were partners in a firm sharing profit & losses in the ratio of 2:2:3 . On 31st
March 2023, their Balance Sheet was as follows:
Amount Amount
Liabilities (₹) Assets (₹)
Creditors 80,000 Land and Building 5,00,000
Bank overdraft 22,000 Machinery 2,50,000
Employees provident Fund 38,000 Furniture 3,50,000
Long term debts 2,00,000 Investment 1,00,000
Capital A/cs: Stock 4,00,000
L 6,25,000 Debtors 2,00,000
M 4,00,000 Bank 20,000
N 5,25,000 15,50,000 Deferred Advertisement Exp 70,000
18,90,000 18,90,000

On 31st March 2023, M retired from the firm and remaining partners decided to carry on
business. It was decided to revalue assets and liabilities as under:
a) Land and Building be appreciated by₹ 2,40,000 and Machinery be depreciated 10%.
b) 50% of investments were taken by the retiring partner at book value.
c) Provision for doubtful debts was to be made at 5% on debtors.
d) Stock will be valued at market price which is ₹1,00,000 less than the book value.
e) Goodwill of the firm be valued at ₹5,60,000. L and N decided to share future profits and
losses in the ratio of 2:3.
f) The total capital of the new firm will be ₹32,00,000 which will be in proportion of profit -
sharing ratio of L and N.
g) Gain on revaluation account amounted to ₹1,05,000.
Prepare Partner’s Capital accounts and Balance sheet of firm after M’s retirement.
[CBSE SAMPLE PAPER 2024)

2 Anshul, Babita and Chander were partners in a firm running a successful business of car
accessories. They had agreed to share profits and losses in the ratio of 1/2 : 1/3 : 1/6
respectively. After running business successfully and without any disputes for 10 years,
Babita decided to retire due to old age and the Anshul and Chander decided to share future
profits and losses in the ratio of 3 : 2. The accountant passed the following journal entry for
Babita share of goodwill and missed some information. Fill in the missing figures in the
following Journal entry and calculate the gaining ratio.

Anshul’s Capital A/c Dr …………

Chander’s Capital A/c Dr 21,000
To Babita’s Capital A/c …………..
(Chander’s share of Goodwill debited to amounts of continuing partners in their gaining
ratio) [CBSE SAMPLE PAPER 2024)

3 Mark, Musk and Alen were partners in a firm sharing profits in 2:2:1 ratio, On 31.3.2023
Alen retires from the firm. On the date of Alen’s retirement the Balance Sheet of the firm was
as follows:
Balance Sheet of Mark, Musk and Alen as at 31.3.2023.
Liabilities Amount(₹) Assets Amount(₹)
Creditors 54,000 Bank 55,000
Bill payable 24,000 Debtors 12,000
Outstanding Rent 4,400 Less: Provision 800 11,200
 CBSE XII COMPILED BY SUDHIR SINHA
ACCOUNTANCY RETIREMENT OF PARTNER

Provision for legal claims 12,000 Stock 18,000

Capitals Furniture 8,200
Mark 92,000 Premises 1,94,000
Musk 60,000
Alen 40,000 1,92,000
2,86,400 2,86,400
On Alen’s retirement it was agreed that:
(a) Premises will be appreciated by 5%.
(b) Furniture will be appreciated by ₹2,000.
(c) Stock will be depreciated by 10%.
(d) Provision for bad debts was to be made at 5% on debtors.
(e) Provision legal damages to be made for ₹14,400.
(f) Goodwill of the firm is valued at ₹48,000.
(g) ₹50,000 from Alen’s Capital A/c will be transferred to his Loan A/c and balance will be
paid by cheque.
Prepare Revaluation A/c, Partners Capital A/c’s and Balance Sheet of Mark and Musk after
Alen’s Retirement. [CBSE ADDITIONAL QUESTIONS FOR PRACTICE 2023]

4 Reyansh, Aayushman and Sabhya were partners in a firm sharing profits and losses in the
ratio of 5 : 3 : 2. Their Balance Sheet as at 31st March, 2022 was as under :

Amount Amount
Liabilities (₹) Assets (₹)
Sundry Creditors 2,20,000 Cash 1,60,000
General Reserves 1,20,000 Debtors 1,80,000
Less: Prov for
Capital A/cs: D/D 20,000 1,60,000
Reyansh 6,00,000 Stock 2,00,000
Aayushman 5,00,000 Machinery 6,00,000
Sabhya 3,00,000 14,00,000 Building 4,00,000
Patents 1,20,000
Profit and Loss A/c 1,00,000
17,40,000 17,40,000

Reyansh retired on the above date and it was agreed that:

(i) Goodwill of the firm on Reyansh’s retirement was valued at ₹12,00,000.
(ii) Aayushman and Sabhya will share future profits in the ratio of 2 : 3.
(iii) An unrecorded creditor of ₹40,000 will be taken into account.
(iv) Debtors of ₹30,000 will be written off as bad debts.
(v) Amount payable to Reyansh was to be transferred to his loan amount.
Pass necessary journal entries for the above transactions in the books of the firm.
[CBSE (Main Exam 2023), 6 Marks]

5 Suman, Vivek and Vinod were partners in a firm sharing profits and losses in the ratio of
5:3:2. Suman retired on 1st April, 2022. After making all adjustments relating to revaluation,
goodwill and accumulated profits, etc., the capital accounts of Vivek and Vinod showed
credit balances of ₹3,60,000 and ₹1,40,000 respectively.
It was decided to adjust the capitals of Vivek and Vinod in their new profit sharing ratio.
Pass necessary journal entries for bringing in or withdrawal of the necessary amounts. Show
your working clearly. [CBSE (Main Exam 2023), 3 Marks]

6 B, P and T were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. On
31.03.2022, their Balance Sheet was as follows:
 CBSE XII COMPILED BY SUDHIR SINHA
ACCOUNTANCY RETIREMENT OF PARTNER

Balance Sheet of B, P and T as at 31st March, 2022

Liabilities (₹) Assets (₹)
Creditors 1,40,000 Bank 1,44,000
General Reserves 2,00,000 Stock 66,000
Workmen Compensation Fund 90,000 Debtors 1,50,000
Capital A/cs: Less: Prov 20,000 1,30,000
B 4,00,000 Furniture 70,000
P 2,00,000 Machinery 2,20,000
T 1,00,000 7,00,000 Land and Building 5,00,000
11,30,000 11,30,000

On the above date, B retired from the firm on the following terms:
(i) Goodwill of the firm will be valued at <3,60,000 and B’s share will be adjusted without
opening goodwill account.
(ii) Furniture will be reduced to ₹60,000.
(iii) A claim of ₹1,00,000 was admitted for workmen’s compensation.
(iv) B was paid ₹20,000 through a cheque and the balance was transferred to his loan account.
Prepare Revaluation Account and Partner’s Capital Accounts.
[CBSE (Comptt Exam 2023), 6 Marks]

7 Heena, Meena and Tina are partners in a firm sharing profits and losses equally. Their
Balance Sheet on April 1st, 2020 was as follows:
Balance Sheet of Heena, Meena & Tina as on 1st April, 2020
Liabilities (₹) Assets (₹)
Bills Payable 12,000 Building 40,000
Sundry Creditors 18,000 Machinery 30,000
General Reserves 12,000 Furniture 12,000
Capital A/cs: Stock 22,000
Heena 30,000 Debtors 20,000
Meena 30,000 Less Provision 1,000 19,000
Tina 28,000 88,000 Bank 7,000
1,30,000 1,30,000

Tina retired from the firm on the above date and the following was agreed upon:
a) Building was to be appreciated by 20%.
b) Machinery was to be depreciated by ₹1,500.
c) Provision for doubtful debts was to be increased to ₹1,500.
d) Goodwill was valued at ₹21,000 on Tina's retirement and the same was to be treated
without opening goodwill account.
e) The balance in Tina's Capital account will be transferred to her Loan account
Prepare Revaluation Account and Partners' Capital Accounts.
[CBSE (Main Exam 2022), 5 Marks]

8 Madhu, Tina and Neha were partners in a firm sharing profits and losses in the ratio of
4:3:3. On 31st March, 2022, Tina retired and her share was taken over by Madhu and Neha
in the ratio of 2 : 1. Calculate the new profit sharing ratio of Madhu and Neha.
[CBSE (Comptt Exam 2022, SET A), 2 Marks]
 CBSE XII COMPILED BY SUDHIR SINHA
ACCOUNTANCY RETIREMENT OF PARTNER

9 A, B and C were partners a firm sharing profits and losses in the ratio of 3:2:1. On 31st
March, B retired from the firm. On B’s retirement the goodwill of the firm was valued at
₹1,80,000.
Calculate B’s share of goodwill and pass necessary journal entry for the same without
opening goodwill account. [CBSE (Comptt Exam 2022, SET A), 2 Marks]

10 P, Q, R and S were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2 : 1.
On 31st March 2022, P retired from the firm. P’s share was taken over by Q, R and S in the
ratio of 1 : 2 : 3. Calculate the new profit sharing ratio of Q, R and S.
[CBSE (Comptt Exam 2022, SET B), 2 Marks]

11 Geeta, Seeta and Meeta were partners a firm sharing profits and losses in the ratio of 2:2:1.
On 31st March, 2022, Meeta retired from the firm. On Meeta’s retirement the goodwill of the
firm was valued at 3 years’ purchase of average profits of the last 5 years. The profits of the
last 5 years were:
Year Profit (₹)
2017-2018 70,000
2018-2019 80,000
2019-2020 90,000
2020-2021 1,00,000
2021-2022 1,10,000
Calculate Meeta’s share of Goodwill and pass necessary journal entry for the same without
opening goodwill account. [CBSE (Comptt Exam 2022, SET B), 2 Marks]

12 Sharad, Sharma, Singh and Shree were partners in a firm sharing profits and losses in the
ratio of 4 : 3 : 2 : 1. The firm closes its books on 31st March every year. On 31st March,
2022 Shree retired and his share was taken over by Sharad, Sharma and Singh in the ratio
of 2 : 3 : 4. Calculate the new profit sharing ratio of the remaining partners after Shree’s
retirement. [CBSE (Comptt Exam 2022, SET C), 2 Marks]

13 Verma, Dharma and Karma were partners in a firm sharing profits and losses in the ratio of
4 : 3 : 3. The firm closes its books on 31st March every year. On 31st March, 2022, Veena
retired. On Veena’s retirement, the goodwill of the firm was valued at ₹2,70,000.
Pass the necessary journal entry for the treatment of Goodwill on Veena’s retirement without
opening goodwill account. [CBSE (Comptt Exam 2022, SET C), 2 Marks]

14 Ravi, Mohan and Pandey were partners in a firm sharing profits and losses in the ratio of
7:8:9. On 31st March, 2022, their Balance Sheet was as follows:
Balance Sheet of Ravi, Mohan and Pandey as at 31st March, 2022
Liabilities (₹) Assets (₹)
Creditors 1,41,000 Bank 27,000

General Reserves 24,000 Stock 91,000

Debtors 2,10,000
Capital A/cs: Less: Prov 10,000 2,00,000
Ravi 3,00,000 Machinery 3,00,000
Mohan 4,00,000 Land and Building 10,00,000
Pandey 8,43,000 15,43,000 Profit and Loss 90,000
17,08,000 17,08,000

On 31st March, 2022, Mohan retired from the firm on the following terms:
(i) Goodwill of the firm was valued at ₹4,80,000.
 CBSE XII COMPILED BY SUDHIR SINHA
ACCOUNTANCY RETIREMENT OF PARTNER

(ii) Mohan’s share of goodwill will be credited to his account without opening goodwill
account.
(iii) Debtors of ₹10,000 will be written off and a provision of 10% for bad and doubtful debts
will be created on debtors.
(iv) Machinery will be depreciated by 10% and land and building will be appreciated by 5%.
(v) The balance of Mohan’s capital account will be transferred to his loan account.
Prepare Revaluation Account and Mohan’s Capital Account on Mohan’s retirement in the
books of the firm.
[CBSE (Comptt Exam 2022), 5 Marks]

15 X, Y and Z were partners sharing profits and losses in the ratio of 5:3:2. Their balance sheet
as at 31st March 2020 was as follows:
Balance Sheet of Heena, Meena & Tina as on 31st March, 2020
Liabilities (₹) Assets (₹)
Creditors 66,500 Land 3,00,000
Bills Payable 10,000 Furniture 10,000
Profit and Loss Account 22,500 Debtors 20,000
Capital A/cs: Less: Prov 500 19,500
X 1,20,000 Stock 20,000
Y 97,000 Patents 45,000
Z 71,000 2,88,000 Bank 50,000
4,44,500 4,44,500
On the above date, Z retired. The terms of retirement were:
1. Goodwill of the firm was valued at ₹80,000.
2. Land will be appreciated by 10% and furniture will be depreciated by 5%.
3. Provision for legal claims will be made at ₹61,000.
4. 90,000 from Z’s capital account will be transferred to his loan account and the
balance will be paid to him by cheque.
Prepare Revaluation Account and Partner’s Capital Account.
[CBSE (Comptt Exam 2021), 8 Marks]

CBSE EXAM’S MULTIPLE-CHOICE QUESTIONS

1 G, S and T were partners sharing profits in the ratio 3:2:1. G retired and his dues towards
the firm including Capital balance, Accumulated profits and losses share, Revaluation Gain
amounted to ₹5,80,000. G was being paid ₹7,00,000 in full settlement. For giving that
additional amount of ₹1,20,000, S was debited for ₹40,000. Determine goodwill of the firm.
(a). ₹1,20,000 (b). ₹80,000
(c). ₹2,40,000 (d). ₹ 3,60,000
[CBSE SAMPLE PAPER 2024, 1 MARK]

2 Aman, Aadhar and Avinash were partners and sharing profits in the ratio of 3 : 2 : 1. Avinash
retired from the firm on 1st July, 2022. On the date of Avinash’s retirement, the balance
sheet showed a debit balance of ₹1,20,000 in the Profit and Loss Account. For calculating
the amount payable to Avinash, this balance will be transferred:
(a) To the debit side of the capital accounts of Aman and Aadhar in old profit sharing ratio.
(b) To the debit side of the capital accounts of Aman, Aadhar and Avinash in old profit
sharing ratio.
(c) To the credit side of the capital accounts of Aman and Aadhar in new profit sharing ratio.
(d) To the credit side of the capital accounts of Aman and Aadhar in their gaining ratio.
CBSE (Main Exam 2023]
 CBSE XII COMPILED BY SUDHIR SINHA
ACCOUNTANCY RETIREMENT OF PARTNER

3 Nidhi, Kunal and Kabir are partners in a firm sharing profits in the ratio of 2 : 1 : 2. Kunal
retired and the balance in his capital account after making necessary adjustments on
account of reserves, revaluation of assets and reassessment of liabilities was ₹80,000. Nidhi
and Kabir agreed to pay him ₹1,00,000 in full settlement of his claim. Kunal’s share of
goodwill of the firm, on his retirement was:
(a) ₹4,000 (b) ₹20,000
(c) ₹16,000 (d) ₹1,80,000
CBSE (Main Exam 2023, Set A]

4 Gurpreet, Vishal and Ananya are partners in a firm sharing profits in the ratio of 2 : 3 : 1.
Vishal retires and the balance in his capital account after making necessary adjustments on
account of reserves, revaluation of assets and re-assessment of liabilities is ₹1,20,000.
Gurpreet and Ananya agreed to pay him ₹1,80,000 in full settlement of his claim. Vishal’s
share of Goodwill of the firm, on his retirement is:
(a) ₹1,20,000 (b) ₹60,000
(c) ₹30,000 (d) ₹15,000
CBSE (Main Exam 2023, Set B]

5 Gaurav, Sonu and Anita are partners in a firm sharing profits in the ratio of 4 : 3 : 2. Sonu
retires and the balance in his capital account after making necessary adjustments on
account of reserves, revaluation of assets and re-assessment of liabilities is ₹4,00,000.
Gaurav and Anita agreed to pay him 4,60,000 in full settlement of his claim. Sonu’s share
of goodwill of the firm, on his retirement is:
(a) ₹20,000 (b) ₹60,000
(c) ₹1,80,000 (d) ₹1,20,000
CBSE (Main Exam 2023, Set C]

6 Pooja, Nita and Anita were partners in a firm sharing profits and losses in the ratio of 3:2:1.
Pooja retired and her share is taken up by Nita and Anita equally. The new profit sharing
ratio of Nita and Anita will be:
(a) 2 : 1 (b) 7 : 5
(c) 1 : 1 (d) 3 : 2 CBSE (Main Exam 2023]

7 Madhu, Tina and Neha were partners in a firm sharing profits and losses in the ratio of
4:3:3. On 31st March, 2022, Tina retired and her share was taken over by Madhu and Neha
in the ratio of 2 : 1. Calculate the new profit sharing ratio of Madhu and Neha.
CBSE (Comptt Exam 2023, Set A]

8 X, Y and Z were partners in a firm sharing profits in the ratio of ½, 1/3 and 1/6
irrespectively. Z decided to retire from the firm. On the date of his retirement, Workmen
Compensation Reserve of ₹1,20,000 was appearing in the balance sheet of the firm. The
claim on account of workmen compensation was determined at ₹67,500. Excess of claim
amount over the reserve will be
(a) Debited to revaluation account (b) Credited to revaluation account.
(c) Debited to partner’s capital account. (d) Credited to partner’s capital account
CBSE (Comptt Exam 2021]