GNG 2.
0 By RAJAT ARORA SIR
Chapter- 4 Retirement of Partner
Topic- Goodwill Reserves and Revaluation
DAY -13 GNG 2.O By Rajat Arora
Sir
Q 1. L, P and G are three partners sharing profits in the ratio 15:9:8. G retires. L and P decided to
share profits in equal ratio. Gaining ratio will be:
a) 15:9
b) 9:15
c) 7:1
d) 1:7
Q 2. P, Q and R are sharing profits and losses equally. R retires and the goodwill is appearing in
the books at ₹30,000. Goodwill of the firm is valued at. ₹1,50,000. Calculate the net amount to
be credited to R's Capital A/c.
a) ₹60,000
b) ₹50,000
c) ₹40,000
d) ₹10,000
Q 3. 'Gaining Ratio' means:
a) Old Ratio - New Ratio
b) New Ratio - Old Ratio
c) Old Ratio - Sacrificing Ratio
d) New Ratio - Sacrificing Ratio
Q 4. What treatment is made of accumulated profits and losses on the retirement of a partner?
a) Credited to all partner's capital accounts in old ratio.
b) Debited to all partner's capital accounts in old ratio.
c) Credited to remaining partner's capital accounts in new ratio.
d) Credited to remaining partner's capital accounts in gaining ratio.
Q 5. A, B and C are partners sharing profits in the ratio of 1/4:3/10: 9/20. The New ratio on the
retirement of C will be :
a) 6:5
b) 5:6
c) 4:3
d) 4:10
Q 6. Arjun, Bheem and Nakul are partners sharing profits and losses in the ratio of 14:5:6
respectively. Bheem retires and surrenders his 5/25th share in favour of Arjun. The goodwill of
the firm is valued at 2 years purchase of super profits based on average profits of last 3 years.
The profits of the last three years are ₹ 50,000, ₹ 55,000 and ₹ 60,000 respectively. The normal
Download DeeCee App for Class 12, CUET, CA Foundation Courses
Contact Us At 011-40848482
GNG 2.0 By RAJAT ARORA SIR
profits of the similar firms are ₹ 30,000. Goodwill already appears in the books of the firm at
75,000. The profit for the first year after the Bheem's retirement was ₹ 1,00,000. Give necessary
journal entries to adjust goodwill and distribute profits showing your workings.
Q 7. Give the journal entry to distribute workmen compensation reserve of ₹ 70,000 at the time
of retirement of Neeti, when there is a claim of ₹ 25,000 against it. The firm has three partners
Raveena, Neeti and Rajat.
Q 8. Banwari, Girdhari and Murari are partners in a firm sharing profits and losses in the
ratio of 4: 5: 6. On 31st March 2014, Girdhari retired. On that date the capitals of
Banwari, Girdhari and Murari before the necessary adjustments stood at ₹ 2,00,000, ₹
1,00,000 and ₹ 50,000 respectively. On Girdhari's retirement, goodwill of the firm was
valued at ₹ 1,14,000. Revaluation of assets and re-assessment of liabilities resulted in a
profit of ₹ 6,000. General Reserve stood in the books of the firm at ₹ 30,000.
The amount payable to Girdhari was transferred to his loan account. Banwari and Murari
agreed to pay Girdhari two yearly instalments of ₹ 75,000 each including interest @10%
p.a. on the outstanding balance during the first two years and the balance including
interest in the third year. The firm closes its books on 31st March every year.
Prepare Girdhari's loan account till it is finally paid showing the working notes clearly.
Q 9. Alok, Narendra and Shiv were partners in a firm sharing profits in the ratio of 5:3:2. Goodwill
appeared at ₹ 90,000 and general reserve at ₹ 50,000 in the books of the firm. Narendra decided
to retire from the firm. On the date of his retirement, goodwill of the firm was valued at ₹
2,40,000. The new profit sharing ratio of Alok and Shiv was 2: 3. Record necessary journal
entries on Narendra's retirement.
Q 10. Ravi, Tanu and Sara were partners in a firm sharing profits and losses in the ratio of 5:3:2.
Ravi retired from the firm due to his illness on 31st March, 2023. The Balance Sheet of the firm
on that date was as follows:
Balance Sheet of Ravi, Tanu and Sara as at 31st March, 2023
Liabilities Amount Assets Amount
Capitals: Fixed Assets 1,20,000
Ravi 80,000 Stock 1,60,000
Tanu 1,24,000 Debtors 2,00,000
Sara 66,000 2,70,000 Cash in hand 80,0000
Profit and Loss 1,70,000
Employee’s Provident 20,000
Fund
Creditors 1,00,000
5,60,000 5,60,000
Additional Information:
i. Creditors included a sum of ₹ 4,000 which was not likely to be claimed.
ii. A provision of 5% for doubtful debts was to be created on debtors.
iii. Goodwill of the firm was valued at ₹1,60,000.
iv. Fixed Assets were found overvalued by ₹ 5,000.
Download DeeCee App for Class 12, CUET, CA Foundation Courses
Contact Us At 011-40848482
GNG 2.0 By RAJAT ARORA SIR
v. New profit sharing ratio of Tanu and Sara was agreed at 2: 3.
vi. The amount due to Ravi was transferred to his loan account.
Prepare Revaluation Account and Partners' Capital Accounts on Ravi's retirement
Download DeeCee App for Class 12, CUET, CA Foundation Courses
Contact Us At 011-40848482
GNG 2.0 By RAJAT ARORA SIR
Answer key
Ans 1. d) 1:7
Ans 2. c) ₹40,000
Ans 3. b) New Ratio - Old Ratio
Ans 4. a) Credited to all partner's capital accounts in old ratio
Ans 5. b) 5:6
Ans 6.
Date Particular L.F. Dr. Cr.
Arjun’s capital A/c Dr. 42,000
Bheem’s capital A/c Dr. 15,000
Nakul’s capital A/c Dr. 18,000
To Goodwill A/c 75,000
(being amount of goodwill written
off in old ratio)
Arjun’s capital A/c Dr. 10,000
To Bheem’s capital A/c 10,000
(being amount of goodwill adjusted
in gaining ratio)
Profit and loss Appropriation A/c Dr. 1,00,000
To Arjun’s capital A/c 76,000
To Nakul’s capital A/c 24,000
(Being profit distributed among
partners)
Ans 7. Journal
Date Particular L.F. Dr. Cr.
Workmen Compensation Reserve A/c Dr. 70,000
To Liability for Workmen Compensation A/c 25,000
To Raveena’s Capital A/c 15,000
To Neeti’s Capital A/c 15,000
To Rajat’s capital A/c 15,000
(being workmen compensation reserve
distributed to old partners in old ratio)
Ans 8. Girdhari’s Loan A/c
Date Particulars Amount Date Particulars Amount
2015 2014
Mar 31 To Bank A/c 75,000 Apr 1 By Girdhari’s Capital 1,50,000
Mar. 31 To Balance c/d 90,000 2015 A/c
Apr 1
Download DeeCee App for Class 12, CUET, CA Foundation Courses
Contact Us At 011-40848482
GNG 2.0 By RAJAT ARORA SIR
_______ 2015 By Interest A/c 15,000
1,65,000 1,65,000
2016 Apr 1 By Balance c/d 90,000
Mar 31 To Bank A/c 75,000 2016
Mar 31 To Balance c/d 24,000 Mar 31 By Interest A/c 9,000
99,000 2016 99,000
2016 Apr 1 By Balance c/d 24,000
Mar. 31 To Bank A/c 26,400 2016
_____ Mar 31 By Interest A/c 2,400
26,400 26,400
Working Note Capital A/c
Particulars Amount Particulars Amount
To Girdhari’s Loan A/c 1,50,000 By Balance b/d 1,00,000
By Share in Goodwill A/c 38,000
(1,14,000 x 5/15)
By Revaluation profit A/c 2,000
(6,000 x 5/15)
By General Reserve A/c 10,000
(30,000 x 5/15)
1,50,000 1,50,000
Ans 9 Journal
Date Particular L.F. Dr. Cr.
Alok’s Capital A//c (90,000 x 5/10) Dr. 45,000
Narendra’s Capital A/c Dr. 27,000
Shiv’s capital A/c Dr. 18,000
To Goodwill A/c 90,000
(being the existing goodwill written off in
old ratio)
General Reserve A/c Dr. 50,000
To Alok’ s capital A/c (50,000 x 5/10) 25,000
To Narendra’s Capital A/c (50,000 x 3/10) 15,000
To Shiv’s Capital A/c (50,000 x 2/10) 10,000
(being general reserve distributed among
the old partners in old ratio)
Shiv’s capital A/c (2,40,000 x 4/10) Dr. 96,000
To Alok’s capital A/c (2,40,000 x 1/10) 24,000
To Narendra’s Capital A/c (2,40,000 x 3/10) 72,000
(being adjusted made for goodwill)
Download DeeCee App for Class 12, CUET, CA Foundation Courses
Contact Us At 011-40848482
GNG 2.0 By RAJAT ARORA SIR
Ans 10. Dr. Revaluation A/c Cr.
Particular Amount Particular Amount
To Provision for 10,000 By Creditor’s A/c 4,000
doubtful debt A/c By Loss transferred
To Fixed Assets A/c 5,000 to partners
Capital A/c
Ravi 5,500
Tanu 3,300
Sara 2,200 11,000
15,000 15,000
Dr. Partner’s Capital A/c Cr.
Particular Ravi Tanu Sara Particular Ravi Tanu Sara
To 5,500 3,300 2,200 By 80,000 1,24,000 66,000
Revaluation Balance
A/c b/d
To Ravi’s - 16,000 64,000 By Tanu’s 16,000 - -
Capital A/c capital
To Ravi’s 2,39,500 - - A/c
Loan A/c By Sara’s 64,000 - -
To Balance - 1,55,700 33,800 capital
c/d A/c 85,000 51,000 34,000
By Profit
and loss
A/c
2,45,000 1,75,000 1,00,000 2,45,000 1,75,000 1,00,000
Download DeeCee App for Class 12, CUET, CA Foundation Courses
Contact Us At 011-40848482
GNG 2.0 Rajat Arora Sir
Download DeeCee App for Class 12, CUET, CA Foundation Courses
Contact Us At 011-40848482
