Reconstitution of Partnership (Retirement of Partner) Book Keeping & Accountancy - Reconstitution of Partnership (Retirement of Partner)

Apte, Bhate and Chitale are sharing 1/2, 3/10, and 1/5 if Apte retire their new ratio will be ______________

New Ratio = Old Ratio + ______________ Ratio.

Gain ratio = ______________ Ratio less Old Ratio.

The balance of the capital account of retired partner is transferred to his ______________ account if it is not paid.

Descrease in the value of assets should be ______________ to Profit and Loss Adjustment Account.

A proportion in which the continuing partners get the share of retiring partner is known as ______________ Ratio.

On retirement, the balance at a Current Account of a partner is transferred to his ______________ Account.

Revaluation A/c is also known as ______________ Account.

Retiring partner’s share of goodwill is ______________ to remaining Partner’s Capital Account.

New Ratio (less) ______________ = Gain ratio.

Retiring partner is not entitled to share in general reserve and accumulated profit.

On retirement of a partner, remaining partner will share the goodwill in their profit sharing ratio.

Retiring partner is called an outgoing partner.

On retirement of a partner, sacrifice ratio is considered.

Retiring partner’s share in profit up to the date of his retirement will be debited to Profit and Loss Suspense Account.

Partner’s Account where Loss or Profit on revaluation is transferred.

Money value of business reputation earned by the firm over a number of years.

The ratio which is obtained by deducting Old Ratio from New Ratio.

Debit balance of Revaluation Account.

The ratio in which the continuing partners are benefited due to retirement of partner.

Why is retiring partner’s capital account credited with goodwill?

How is Gain Ratio calculated?

How is the amount due to the retiring partner settled?

What is New Ratio?

What is Benefit Ratio?

P,Q, and R and partners sharing Profits in the ratio of 2 : 2 : 1. Q retired. Calculate the gain ratio.

X, Y and Z are sharing Profits and Losses in the ratio of 4 : 3 : 2. Z retires the new ratio of X and Y is 3 : 2. Calculate the gain ratio.

A, B and C are sharing Profits and Losses in the ratio of 4 : 3 : 2. B retires and A and C share future profits equally. Calculate gain ratio.

Given below is the balance Sheet of Jaya, Maya and Mamta, who were sharing Profit and losses as 3 : 3 : 2

Balance Sheet as on 31st March 2019
Liabilities	Amt ₹	Assets	Amt ₹
Creditors	34,400	Bank	21,600
Bills payable	9,200	Plant and Machinery	34,800
Capital Account :		Debtors	50,000
Jaya	48,000	Live Stock	25,200
Maya	52,000	Equipments	16,000
Mamta	36,000	Investment	48,000
General Reserve	16,000
	1,95,600		1,95,600

On 1st April 2019 Mamta retired from the firm on the following terms.
1. Assets to be revalued as under Live Stock ₹ 24,000; Plant and Machinery ₹ 32,000, Equipments ₹ 16,800
2. An item of ₹ 400 from Creditors is no longer a liability and hence should be properly adjusted.
3. Mr. Ram, our customer may or may not be able to pay his debts of ₹ 2000
4. The amount due to Mamta be transferred to her Loan Account.
Pass necessary Journal Entries in the books of the firm.

A, B, and C are partners of a firm sharing profit and loss in the 3 : 3 : 2 ratio. Their firm’s Balance Sheet as of 31st March, 2020 is as under:
Balance Sheet as of 31st March 2020

Liabilities		Amt.(₹)	Assets	Amt.(₹)
Bills Payable		11,500	Cash	27,000
General Reserve		20,000	Debtors	62,500
Creditors		43,000	Investments	60,000
Capital Accounts :			Machinery	43,500
A	60,000		Furniture	31,500
B	65,000		Equipments	20,000
C	45,000	1,70,000
		2,44,500		2,44,500

On 1st April 2020, C retired from the firm on the following terms:
1. Outstanding amount of retiring partner C be transferred to his loan account.
2. Write off ₹ 2,500 as bad debts.
3. ₹ 500 is now not payable to creditors.
4. Assets are revalued as under:
Furniture ₹ 30,000, Machinery ₹ 40,000, Equipments ₹ 21,000.
Pass necessary journal entries in the books of a firm.

Following is the Balance Sheet of Anil, Sunil and Suresh who were sharing Profit and Losses equally.

Balance Sheet as on 31st March 2019
Liabilities	Amt ₹	Amt ₹	Assets	Amt ₹	Amt ₹
Creditors		20,300	Bank		8,400
Bills payable		10,600	Debtors	18,000
General Reserve		13,500	Less : R.D.D	900	17,100
Capital A/c :			Computer		17,500
Anil		43,600	Land & Building		70,000
Sunil		35,000	Machinery		10,000
Suresh		32,000	Furniture		20,000
			Goodwill		12,000
		1,55,000			1,55,000

On 1st April 2019 Suresh retired from the firm on the following terms.
1. Land and Building be appreciated by 10% and Computer be reduced by ₹ 1,900.
2. Debtors were all good and R.D.D. was no longer required.
3. Machinery be revalued at ₹ 9,400
4. Goodwill of the firm be valued at ₹ 16,500.
5. Furniture were sold at ₹ 21,800 and part payment of ₹ 15,000 was made to Suresh by R.T.G.S. and balance was transferred to his Loan Account.
Prepare : Profit and Loss Adjustment A/c , Partners capital A/c’s, Balance Sheet of Anil and Sunil

Given Below is the Balance Sheet of Vaishali, Madhuri, and Menka who were sharing profit and losses in the ratio 3 : 3 : 3 :

Balance Sheet as on 31st March 2019
Liabilities	Amt (₹)	Amt (₹)	Assets	Amt (₹)	Amt (₹)
Creditors		10,500	Cash		19,500
Bank Overdraft		5,000	Debtors	16,000
General Reserve		12,000	Less : R.D.D.	2,000	14,000
Capital A/c :			Furniture		15,000
Vaishali		28,700	Machinery		40,000
Madhuri		31,800	Motor car		25,000
Manasi		30,000	Profit & loss A/c		4,500
		1,18,000			1,18,000

Vaishali retired on 1st April 2019 form the firm on the following terms.
1. Furniture be valued ₹ 14,000, Machinery at ₹ 38,000 and Motor car ₹ 23,800
2. R.D.D. be maintained at 5% on Debtors
3. Goodwill of the firm be valued at ₹ 15,000. However only Vailshali’s share in it is to be raised in the Books.
4. A part payment of ₹ 10,000 be made to Vaishali and the balance be transferred to her Loan Account.
Prepare Profit and Loss Adjustment Account , Partners Capital A/c, Balance Sheet of new firm.

Kale, Gore and Pandhare were partners sharing Profit and losses in the ratio 3 : 3 : 2. Their Balance sheet as on 31st March 2018 is as follows.

Balance Sheet as on 31st March 2018
Liabilities	Amt ₹	Assets	Amt ₹
Capital Account :		Building	10,000
Kale	11,000	Plant & Machinery	10,700
Gore	15,000	Live Stock	10,000
Pandhare	8,000	Debtors	5,000
Creditors	8,900	Stock	6,600
Bill Payable	2,000	Bank	6,600
Reserve Fund	4,000
	48,900		48,900

On 1 st April 2018 Mr. Pandhare retired from the firm on the following terms.
1. Assets to be revalued as Stock ₹ 6300, Plant and Machinery ₹ 10,000 Live Stock ₹10,200
2. Goodwill of the firm is to be valued at ₹ 4,000, however only Pandhare’s share in it is to be raised in the books and written off immediately.
3. R.D.D to be maintained at 10 % on debtors.
4. ₹ 100 to be written off from Creditors.
5) The amount payable to Mr. Pandhare to be transferred to his loan account.
Prepare : Profit and Loss Adjustment account, Partners Capital Account, Balance Sheet of new firm.

The Balance Sheet of Shyam Traders Pune is as follows, Partners share Profit and Losses as 5 : 2 : 3

Balance Sheet as on 31st March 2019
Liabilities	Amt ₹	Amt ₹	Assets	Amt ₹	Amt ₹
Capital Account :			Plant & Machinery		32,000
Rambha		36,000	Building		40,000
Menka		32,000	Stock		20,400
Urvashi		17,600	Debtors	16,800
Creditors		20,000	Less: R. D. D.	800	16,000
Bill Payable		1,200	Bank		12,400
General Reserve		14,000
		1,20,800			1,20,800

1) Menka retired from the business on 1st April 2019 on the following terms. The assets were revalued as under.
i) Stock at ₹ 28,000 ii) Building is appreciated by 10%
iii) R.D.D. is to be increased upto ₹ 1000
iv) Plant and Machinery is to be depreciated by 10%
2. The Goodwill of retiring partner is valued at ₹ 8000 and the remaining Partners decided that
Goodwill be written back in their New Profit sharing ratio which will be 5:3
3. Amount due to Menka is to be transferred to her Loan Account
Prepare : Profit and Loss Adjustment A/c , Capital Account of partners, Balance Sheet of new firm.

Following is the Balance Sheet of the firm of Nana, Nani and Sona who share Profits and Losses in the ratio of their Capital

Balance Sheet as on 31st March 2019
Liabilities	Amt (₹)	Assets		Amt (₹)
Capital A/c:		Machinery		20,000
Nana	50,000	Building		55,000
Nani	20,000	Stock		12,000
Sona	30,000	Debtors 12000 Less : R.D.D. 1000		11,000
Creditors	10,000	Cash		17000
Bills Payable	5,000
	1,15,000			1,15,000

Sona retires from the business on 1st April 2019 and the following Adjustment were agreed.
1. Stock is to be valued at 92% of its Book Value
2. R.D.D. is to be maintained at 10% on debtors
3. The value of Building is to be appreciated by 20%
4 The Goodwill of the firm be fixed at ₹ 12000. Sona’s share in the same be adjusted in the accounts of continuing partners in Gain Ratio.
5. The entire Capital of the new firm be fixed at ₹ 1,60,000 between Nana and Nani in their New Profit sharing ratio which is fixed at 3:1 making adjustment in Cash.
6. Amount payable to Sona paid in cash.
Prepare : Revaluation A/c, Partnership Capital A/c , Balance Sheet as on 1st April 2019.

The credit balance on the Profit and Loss Suspense Account is shown in the Balance Sheet on _____________ side.

Credit balance of Revaluation Account means _____________ on revaluation.

Excess of actual capital over proportional capital is known as _____________

An amount payable to the retiring partner is paid off at a time is known as _____________ Method.

The amount due to a partner on his retirement is transferred to _____________ Account.

The Balance Sheet of Mr Mama, Kaka and Mr Baba who shared profits and losses as 4 : 3 : 3 respectively.
Balance Sheet as on 31st March, 2018

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.
Prepare Profit and Loss Adjustment A/c, Partners’ Capital A/cs and Balance Sheet of the new firm.