Test: Retirement Of A Partner - 1


30 Questions MCQ Test Principles and Practice of Accounting | Test: Retirement Of A Partner - 1


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QUESTION: 1

A, B and C are partners with profits sharing ratio 4:3:2. B retires and Goodwill Rs. 10,800 was shown in books of account. If A & C shares profits of B in 5:3, then find the value of goodwill shared between A and C. 

Solution:

Calculation of gaining ratio 

Old ratio (A, B and C) = 4 : 3 : 2

B retires from the firm

New artio (A and C ) = 5 : 3

Gaining ratio = New ratio - Old ratio

A's new share = (5/8) - (4/9) = (45 - 32) /72 = 13/72

C's new share = (3/8) - (2/9) = (27 - 16) / 36 = 11/72

gaining ratio = 13 : 11

2. Adjustment of goodwill 

C's share of goodwill = (10800 * 3) / 9 = 3600

This share of goodwill is to be debited to remaining partners' capital account in their gaining ratio (i.e., 13 : 11 )

Journal entry for the above will be:

A's capital A/c                    Dr.          1950

C's capital A/c                    Dr.          1650

          To B's capital A/c                          3600

QUESTION: 2

Retiring or outgoing partner: 

Solution:
QUESTION: 3

A, B and C were partners in a firm sharing profits and losses in the ratio of 2:2:1. Respectively with the capital balance of Rs. 50,000 for A and B, for C Rs. 25,000. B declared to retire from the firm and balance in reserve on the date was Rs. 15,000. If goodwill of the  firm was valued as Rs. 30,000 and profit on revaluation was Rs. 7,050 then what amount will be transferred to the loan account of B.

Solution:
QUESTION: 4

A, B and C were partners in a firm sharing profits and losses in the ratio of 2:2:1. The capital balances of A, B and C are Rs. 50,000, Rs. 50,000 and Rs. 25,000 respectively. B declared to retire from the firm on 1st April, 2008. Balance in reserve on the date was Rs. 15,000. If goodwill of the firm was valued as Rs. 30,000 and profit on revaluation was Rs. 7,050, then what amount will be transferred to the loan account of B.

Solution:
QUESTION: 5

A, B and C are partners sharing profits in the ratio 2:2:1. On retirement of B, goodwill was valued as Rs. 30,000. Find the contribution of A and C to compensate B. 

Solution:
QUESTION: 6

At the time of retirement of a partner, firm gets____________from the insurance company against the Joint Life Policy taken jointly for all the partners.

Solution:
QUESTION: 7

 X, Y, Z are partners sharing profits in the ratio 3:4:3 Y retires, and X and Z share his profits in equal ratio. Find the new ratio of X and Z. 

Solution:
QUESTION: 8

At the time of retirement of a partner, firm gets ______from the insurance company against the joint life policy taken jointly for all the partners: 

Solution:
QUESTION: 9

Joint Life Policy is taken by the firm on the life(s) of …………………..

Solution:
QUESTION: 10

How unrecorded assets are treated at the time of retirement of a partner?

Solution:
QUESTION: 11

 X, Y, Z were partners sharing profits in ratio 5:3:2. Goodwill does not appear in books, but it is agreed to be worth Rs. 1,00,000. X retires from the firm and Y and Z decide to share future profits equally. X’s share of goodwill will be debited to Y’s and Z’s capital A/cs in ratio: 

Solution:
QUESTION: 12

Out going partner is compensated for parting with firm’s future profit’s in favour of remaining partners. The remaining partners contribute to such compensation in : 

Solution:
QUESTION: 13

A, B and C are partners sharing profits and losses in the ratio of 1/2, 3/10 and 1/5. B retires from  the firm, A and C decide to share the future profits and losses in 3:2. Calculate gaining ratio:

Solution:
QUESTION: 14

The capitals of A, B and C are Rs. 1,00,000; Rs. 75,000 and Rs. 50,000, profits are shared in the ratio of 3:2:1. B retires on the basis of his share purchased by other partners keeping the total capital intact. The new ratio between A and C is 3:1. Find the capital of A and C after purchasing B’s share. 

Solution:
QUESTION: 15

A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partner’s capital account on receiving the JLP amount if joint life policy is maintained at the surrender value?

Solution:
QUESTION: 16

A, B, and C are partners with capitals of Rs. 1,00,000, Rs. 75,000 and Rs. 50,000. On C’s retirement his share is acquired by A and B in the ration of 6:4. Gaining ratio will be:

Solution:
QUESTION: 17

When the goodwill is raised at its full value and written off at retirement of a partner, the remaining partners share goodwill in ______.

Solution:
QUESTION: 18

A, B and C are partners with profits sharing ratio 4:3:2. B retires. If A & C shares profits of B in 5:3, then find the new profit sharing ratio

Solution:
QUESTION: 19

A, B and C are partners sharing profits in the ratio of 2:2:1. On retirement of B, goodwill was valued as Rs. 30,000. Find the contribution of A and C to compensate B: 

Solution:
QUESTION: 20

A, B and C were partners sharing profits and losses in the ratio of 3 : 2 : 1. On 1st April, 2011 B retired and the new profit sharing ratio between A and C decided to 3 : 2. On 31st March 2011, there were reserves of firm Rs. 24,000. This reserve will be divided among partners as:

Solution:
QUESTION: 21

 X, Y, Z are equal partners in a firm. Z retires from the firm. The new profit sharing ratio between X and Y is 1:2 find the gaining ratio

Solution:
QUESTION: 22

Balances of M/s. Ram, Rahul and Rohit sharing profits and losses in proportion to their capitals, stood as Ram Rs. 3,00,000; Rahul Rs. 2,00,000 and Rohit Rs. 1,00,000. Ram desired to retire form the firm and the remaining partners decided to carry on, Joint life policy of the partners surrendered and cash obtained Rs. 60,000. What will be the treatment for JLP?

Solution:
QUESTION: 23

A, B and C were partners sharing profits and losses in the ratio of 3:2:1. A retiredand Goodwill of the firm is to be valued at Rs. 24,000 . What will be the treatment for goodwill?

Solution:
QUESTION: 24

 Hari, Roy and Prasad are partners in the ratio of 3:5:1 respectively. Roy wants to retire. His share is being purchased by Prasad. What would be the new ratio of Hari and Prasad respectively?

Solution:
QUESTION: 25

 Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000. A desired to retire form the firm, B and C share the future profits equally, goodwill of the entire firm be valued at Rs. 1,40,000 and no Goodwill account being raised.

Solution:
QUESTION: 26

Balances of Ram, Hari & Mohan sharing profits and losses in the ratio 2:3:2 stood as follows: Capital Account: Ram Rs. 10,00,000; Hari Rs. 15,00,000; Mohan Rs. 10,00,000 Joint Life Policy Rs. 3,50,000. Hari desired to retire from the firm and the remaining partners decided to carry on with the future profit sharing ratio of 3:2. Joint Life Policy of the partners surrendered and cash obtained Rs. 3,50,000.  What would be the treatment for JLP A/c?

Solution:
QUESTION: 27

 X, Y, Z are partners sharing profits and losses equally. They took a joint life policy of Rs. 5,00,000 with a surrender value of Rs. 3,00,000. The firm treats the insurance premium as an expense. Y retired and X and Z decided to share profits and losses in 2:1. The amount of Joint life policy will be transferred as: 

Solution:
QUESTION: 28

 A, B and C are partners sharing profits equally. A retires and goodwill appearing in the books at Rs. 3,000 is valued at Rs. 6,000. A will get credit of :

Solution:
QUESTION: 29

A, B, C are partners sharing profits the ratio of 2:2:1. A’s capital is Rs. 50,000, B’s Capital Rs. 70,000 and C Rs 35,000. B retires from the firm and balance in reserve on the date was Rs. 25,000. If goodwill of the firm was Rs. 30,000 and profit on revaluation was Rs. 7,500 then amount payable to B is: 

Solution:
QUESTION: 30

P, Q and R were partners sharing profit and losses in the ratio of 2 : 2 : 1 respectively, with the balance of capital Rs. 75,000, Rs. 50,000 and Rs. 25,000 respectively on 1st April 2011. Q decided to retire from the firm on 31st March 2012. On that day the balance in the reserve account was Rs. 12,000. If the goodwill of the firm was valued as Rs. 30,000 and profit on revaluation was Rs. 10,000, then what amount would be transferred to the loan account of Q?

Solution:

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