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Chapters
2: Accounts of ‘Not for Profit’ Concerns
3: Reconstitution of Partnership (Admission of Partner)
▶ 4: Reconstitution of Partnership (Retirement of Partner)
5: Reconstitution of Partnership (Death of Partner)
6: Dissolution of Partnership Firm
7: Bills of Exchange
8: Company Accounts - Issue of Shares
9: Analysis of Financial Statements
10: Computer In Accounting
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Solutions for Chapter 4: Reconstitution of Partnership (Retirement of Partner)
Below listed, you can find solutions for Chapter 4 of Maharashtra State Board Balbharati for Book Keeping and Accountancy [English] 12 Standard HSC Maharashtra State Board.
Balbharati solutions for Book Keeping and Accountancy [English] 12 Standard HSC Maharashtra State Board 4 Reconstitution of Partnership (Retirement of Partner) Exercise 4.1 (Objective Questions) [Pages 182 - 183]
Select the most appropriate alternative from those given below and rewrite the sentence.
The Profit or Loss from revaluation on the retirement of a partner is shared by ______.
The remaining partners
All the partners
Only retiring partner
Bank
Decrease in the value of assets should be ______ to Profit and Loss Adjustment Account.
Debited
Credited
Added
Equal
The balance of the capital account of retired partner is transferred to his _________ account if it is not paid.
Loan
Personal
Current
Son's
Gain ratio _______ Ratio less Old Ratio.
New
Equal
Capital
Sacrifice
New Ratio = Old Ratio + _____ Ratio
Gain
Capital
Sacrifice
Current
Apte, Bhate and Chitale are sharing `1/2, 3/10, "and" 1/5` if Apte retire their new ratio will be ______.
5: 2
3: 2
5: 3
2: 5
Write the Word/Term/Phrase which can substitute of the following statement:
Credit balance of Profit and Loss Adjustment Account.
Write the Word/Term/Phrase which can substitute of the following statement:
The ratio in which the continuing partners are benefited due to the retirement of partner.
Write the Word/Term/Phrase which can substitute the following statement:
Debit balance of revaluation Account.
Write the word/phrase/term/ which can substitute of the following statement:
The ratio which is obtained by deducting the Old Ratio from New Ratio.
Write the Word/Term/Phrase which can substitute of the following statement:
Money value of business reputation earned by the firm over a number of years.
Write the Word/Term/Phrase which can substitute of the following statement:
Partner’s Account where Loss or Profit on revaluation is transferred.
State whether the following statement is true or false with reason.
Gain ratio means New ratio minus Old ratio.
True
False
State whether the following statement is true or false with reasons.
Retiring partner’s share in profit up to the date of his retirement will be debited to Profit and Loss Suspense Account.
True
False
State whether the following statement is true or false with reason.
On retirement of a partner, a sacrifice ratio is considered.
True
False
State whether the following statement is true or false with reason.
Retiring partner is called an outgoing partner.
True
False
State whether the following statement is true or false with reason.
On retirement of a partner, remaining partner will share the goodwill in their profit sharing ratio.
True
False
State whether the following statement is true or false with reason.
Retiring partner is not entitled to share in general reserve and accumulated profit.
True
False
Fill in the blanks and rewrite the following sentences:
New Ratio (less) _________ = Gain ratio
Retiring Partner’s share of goodwill is ________ to the remaining partner’s capital account.
Revaluation A/c is also known as ________ account.
On retirement, the balance at a current Account of a partner is transferred to his _______ account.
A proportion in which the continuing partners get the share of retiring partner is known as ________ ratio.
Answer the following.
What is meant by Retirement of a Partner?
What is Benefit Ratio?
What is New Ratio?
How is the amount due to the retiring partner settled?
How is Gain Ratio calculated?
Why is retiring partner’s capital account credited with goodwill?
Balbharati solutions for Book Keeping and Accountancy [English] 12 Standard HSC Maharashtra State Board 4 Reconstitution of Partnership (Retirement of Partner) Exercise 4.2 (Practical Problems) [Pages 183 - 186]
The Balance Sheet of Mr. Mama, Kaka and Mr. Baba who shared profit and losses as 4:3:3 respectively.
| Balance Sheet as on 31 st March 2018 | |||||
| Liabilities | Amount ₹ | Amount ₹ | Assets | Amount ₹ | Amount ₹ |
| Suppliers | 7,000 | Cash | 4,500 | ||
| Loan | 5,000 | Sundry Debtors | 5,000 | ||
| General Reserve | 6,250 | Less: R:D:D | 500 | 4,500 | |
| Capital Account: | Live Stock | 12,500 | |||
| Mama | 20,000 | Motor Car | 4,000 | ||
| Kaka | 15,000 | Furniture | 17,500 | ||
| Baba | 12,250 | Plant | 22,500 | ||
| 65,500 | 65,500 | ||||
Kaka retires on 1st April 2018 on the following terms.
1. The share of Kaka in Goodwill of the firm is valued at ₹ 2,700
2. Furniture to be depreciated by 10% and Motor Car by 12.5%
3. Live Stock to be appreciated by 10% and Plant by 20%
4. A provision of ₹ 2,000 to be made for a claim of compensation.
5. R.D.D. is no longer necessary.
6. The amount payable to Kaka should be transferred to his Loan A/c
The Balance Sheet of Ram, Shyam, and Ghanshyam sharing profits and losses 3:2:1 respectively. Their position on 31-3-2019 were as follows.
| Balance Sheet as on 31st March 2019 | |||
| Liabilities | Amount ₹ | Assets | Amount ₹ |
| Capitals : | Bank | 54,000 | |
| Ram | 1,20,000 | Debtors | 90,000 |
| Shyam | 90,000 | Building | 60,000 |
| Ghanshyam | 60,000 | Investment | 1,50,000 |
| Creditors | 22,000 | ||
| Bills payable | 12,000 | ||
| Loan | 50,000 | ||
| 3,54,000 | 3,54,000 | ||
Ghanshyam retired on 1st April 2019 on the following terms.
1. Building and Investment to be appreciated by 5% and 10% respectively.
2. Provision for Doubtful Debts to be created at 5% on Debtors.
3. The provision of ₹ 3,000 be made in respect of Outstanding Salary.
4. Goodwill of the firm is valued at ₹ 90,000 and partners decide that goodwill should be written back.
5. The amount payable to the Retiring partner be transferred to his Loan A/c.
Prepare : Profit and Loss Adjustment A/c, Partners Capital A/c, Balance Sheet of New Firm.
The Balance Sheet of the Anu, Renu, and Dinu is as follows, the partners are sharing profits and losses in the proportion of 2:2:1 respectively.
| Balance Sheet as on 31st March 2019 | |||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Creditors | 8,000 | Bank | 5,000 | ||
| Bills Payable | 2,000 | Debtors | 20,000 | ||
| General Reserve | 5,000 | Less : R.D.D | 1,000 | 19,000 | |
| Capital Account: | Furniture | 15,000 | |||
| Anu | 40,000 | Machinery | 4,000 | ||
| Renu | 30,000 | Free hold Property | 27,000 | ||
| Dinu | 15,000 | Goodwill | 30,000 | ||
| 1,00,000 | 1,00,000 | ||||
Dinu retires from the firms on 1st April 2019 on the following terms.
1. The assets are to be revalued as freehold property ₹ 30,000, Machinery ₹ 5000, Furniture ₹ 12000, All debtors are good.
2. Goodwill of the firm is valued at thrice the average profit for the preceding five years. Profits of the firm for the year.
| 2014-15 | ₹ 14,500 |
| 2015-16 | ₹ 10,500 |
| 2016-17 | ₹ 10,000 |
| 2017-18 | ₹ 16,000 |
| 2018-19 | ₹ 10,000 |
3. Dinu should be paid ₹ 3,000 by cheque.
4. The Balance of Dinu’s capital A/c should be kept in the business as a loan.
Prepare: Profit and loss adjustment A/c, Capital Accounts of partners, Balance Sheet of the new firm.
Rohan, Rohit, and Sachin are partners in a firm sharing profit and losses in the proportion 3:1:1 respectively. Their balance sheet as on 31st March 2018 is as shown below
| Balance Sheet as on 31st March 2018 | |||||
| Liabilities | Amount ₹ | Assets | Amount ₹ | ||
| Creditors | 40,000 | Bank | 12,500 | ||
| General Reserve | 50,000 | Debtors | 60,000 | ||
| Bills payable | 25,000 | Live Stock | 50,000 | ||
| Capital Accounts : | Building | 75,000 | |||
| Rohan | 1,25,000 | Plant and Machinery | 35,000 | ||
| Rohit | 1,00,000 | Motor Truck | 1,00,000 | ||
| Sachin | 50,000 | Goodwill | 57,500 | ||
| 3,90,000 | 3,90,000 | ||||
On 1st April 2018, Sachin retired and the following adjustments have been agreed upon.
1. Goodwill was revalued at ₹ 50,000
2. Assets and Liabilities were revalued as follows. Debtors ₹ 50,000, Live Stock, ₹ 45,000; Building ₹ 1,25000, Plant and Machinery ₹ 30,000, Motor Truck ₹ 95,000 and Creditors ₹ 30,000
3. Rohan and Rohit contributed additional capital through Net Banking of ₹ 50,000 and ₹ 25,000 respectively.
4. Balance of Sachin’s Capital Account is transferred to his Loan Account
Give Journal entries in the books of new firm.
Shah, Lodha, and Dhole were partners sharing profits and losses in the ratio of 4:3:3. Their Balance Sheet as on 31st March 2019 is a given below.
| Balance Sheet as on 31st March, 2019 | |||||||
| Liabilities | Amount ₹ | Amount ₹ | Assets | Amount ₹ | Amount ₹ | ||
| Sundry Creditors | 20,000 | Cash | 9,000 | ||||
| Bills payable | 4,000 | Sundry Debtors | 10,000 | ||||
| Capital Account: | (−) R.D.D. | 1,000 | 9,000 | ||||
| Shah | 45,000 | Furniture | 25,000 | ||||
| Lodha | 35,000 | Computers | 43,000 | ||||
| Dhole | 27,000 | Vehicles | 45,000 | ||||
| 1,31,000 | 1,31,000 | ||||||
On 1st April 2019, Mr. Lodha retired from the firm on the following terms.
1. Goodwill is to be valued at average Profits and Losses of the last five years which were as follows.
| Years | Profit/Loss |
| 2015 | ₹ 35,000 |
| 2016 | ₹ 20,000 |
| 2017 | ₹ 30,000 |
| 2018 | ₹ 20,000 |
| 2019 | ₹ 25,000 |
2. Computers to be depreciated by 10%
3. Furniture to be revalued at ₹ 27,500
4. Vehicles appreciated by 20%
5. R.D.D. was no longer necessary
6. Shah and Dhole will share the future profits and losses in the ratio of 2:1
7. It was decided that goodwill should not appear in the books of a new firm and amount payable to Lodha is to be transferred to his Loan A/c
Prepare: Profit and Loss adjustment A/c, Partners capital accounts, Balance sheet of new firm.
Solutions for 4: Reconstitution of Partnership (Retirement of Partner)
Balbharati solutions for Book Keeping and Accountancy [English] 12 Standard HSC Maharashtra State Board chapter 4 - Reconstitution of Partnership (Retirement of Partner)
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Concepts covered in Book Keeping and Accountancy [English] 12 Standard HSC Maharashtra State Board chapter 4 Reconstitution of Partnership (Retirement of Partner) are Reconstitution of Partnership (Retirement of Partner), Treatment of Goodwill, Transfer of Reserve Fund Or General Reserve/Accumulated Profit Or Loss, Accounting for Revaluation of Assets and Reassessment of Liabilities, Retirement Or Death of a Partner - Adjustment of Capitals, Total Payable Amount to Retiring Partner.
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