ACCOUNTANCY (CLASS XII)

ASSIGNMENT-5
RECONSTITUTION OF A PARTNERSHIPFIRM – RETIREMENT OF A
PARTNER
Q-1. State two adjustments to be made at the time of retirement of a partner.

Q-2.What do you mean by Gaining Ratio ?

Q-3 Bon,Ton and Don are partners in a firm sharing profits in the ratio 5:3:2. Don retires
from the firm. In which ratio Bon and Ton will share the future profits?

Q-4 X, Y and Z are partners sharing profits in the ratio of 4/9, 1/3 and 2/9. X retires and
surrenders 2/3rd of his share in the favour of Z. Calculate new profit sharing ratio and
gaining ratio.

Q-5 A, B and C are the partners sharing profits in the ratio of 4:3:2. B retires and the
goodwill of the firm is valued at 18,000.Pass journal entry for the treatment of goodwill
on B’s retirement.

Q-6 Shyam, Mohan and Sohan are partners in a firm sharing profits in the ratio
3:2:1.Mohan retires and Shyam and Sohan decided that the capital of the new firm shall
be fixed at 1,80,000 in their new profit sharing ratio. The capital accounts of Shyam and
Sohan after making all the adjustments are 1,25,000 and 50,000 respectively. Calculate
the actual cash to be paid off or to be bought in by the continuing partners and pass
necessary journal entries.

Q-7 A, B and C are partners in a firm sharing profits and losses in the ratio of 3:2:1.Their
Balance Sheet as at March 31 2019 is as under:

Liabilities Assets
Creditors 30,000 Cash in Hand 18,000

Bills Payable 16,000 Debtors 25,000

Less : provision 3,000
General Reserve 12,000 -------- 22,000
 Workmen Compensation Furniture 30,000
Fund 10,000
Stock 18,000
Capital A/C
A 80,000 Machinery 70,000
B 70,000
C 30,000 1,80,000 Goodwill 10,000
---------
Land and building 80,000

1,68,000 1,68,000

B retired on 1st April,2019 on the following terms:

i) Provision for doubtful debts will be raised by 1,500.

ii) Stock will be depreciated by 5% and furniture by 10%.

iii) There is an outstanding claim for damages of 1,200 and it is to be provided for in the
books at 900.

iv) Creditors to be written back by 5,000

v) Goodwill of the firm is valued at 24,000.

vi) Workmen compensation claim is 12,000.

vii) B is paid with cash brought in by A and C in such a manner that their capitals are in
proportion to their profit sharing ratio 4:1.

Prepare necessary accounts to close the books of the firm.