Test: Retirement Of A Partner - 2


30 Questions MCQ Test Principles and Practice of Accounting | Test: Retirement Of A Partner - 2


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QUESTION: 1

A, B and C were partners sharing profits and losses in the ratio of 3:2:1. A retired and firm received the joint life policy as Rs. 7,500 appearing in the balance sheet at R.s 10,000. JLP is credited and cash debited with Rs. 7,500, what will be the treatment for the balance in Joint Life Policy. 

Solution:
QUESTION: 2

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: 3

A, B and C are partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2 respectively. The balance of capital is Rs. 50,000 for A and B each and Rs. 40,000 for C. B declares to retire from the firm. The goodwill of the firm is valued at Rs. 30,000 and profit on revaluation of assets is Rs. 5,000. The firm also has a balance in the reserve account for Rs. 15,000 on that date. What amount will be payable to B?

Solution:
QUESTION: 4

Balances of A, B and C sharing profits and losses in proportion to their capitals, stood as  A -Rs. 2,00,000; B - Rs. 3,00,000 and C - Rs. 2,00,000; Joint Life Policy Reserve  A/c Rs. 80,000 and Joint Life Policy A/c Rs. 80,000. A desired to retire form the firm and the remaining partners  decided to carry on in equal  ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for Joint Life Policy Reserve A/c?

Solution:
QUESTION: 5

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: 

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QUESTION: 6

Claim of the retiring partner is payable in the following form

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QUESTION: 7

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 surrender along with the reserve?

Solution:
QUESTION: 8

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: 9

 A, B and C are partners sharing profits and losses in the ratio of 3:2:1. C retires on a decided date and Goodwill of the firm is to be valued at Rs. 60,000. Find the mount payable to retiring partner on account of goodwill

Solution:
QUESTION: 10

Balance 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. 30,00,000 and C Rs. 2,00,000. JLP Reserve and JLP at Rs. 80,000. A desired to retire form the firm, B and C share the future profits equally. Joint life Policy of the partners surrendered and cash obtained Rs. 0,000. Goodwill of the entire firm be valued at Rs. 1,40,000 and no Goodwill account being raised. Revaluation Loss was Rs. 10,000. Amount due to A is to be settled on the following basis: 50% on retirement and the balance 50% within one year. The total capital of the firm is to be the same as before retirement. Individual capitals in their Profit sharing ratio. Find the balance of Partner’s Capital Account.

Solution:
QUESTION: 11

 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: 12

Under _________ the premium paid is treated as an ordinary expense and joint life policy does not appear as an asset in the Balances Sheet of the firm:

Solution:
QUESTION: 13

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: 

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QUESTION: 14

If a partner dies, then JLP will be reckoned at ________.

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QUESTION: 15

If the firm gets dissolved due to retirement of one the partners, then what amount of JLP will be credited in partner’s capital A/c?

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QUESTION: 16

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

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QUESTION: 17

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 premium is fully charged to revenue as and when paid?

Solution:
QUESTION: 18

Under _________ the premium paid is treated as an ordinary expense and joint life policy does not appear as an asset in the Balances Sheet of the firm:

Solution:
QUESTION: 19

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: 20

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:

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

B's profit share = 3/9 or 1/3

A and C decided to take his share in the ratio of 5 : 3

Share of B taken by A = (1/3) * (5/8) = 5/24

Share of B taken by C = (1/3) * (3/8) = 1/8 or 3/24

New profit sharing ratio = Old ratio + Share taken from B

A's new share = (4/9) + (5/24) = 47/72

C's new share = (2/9) + (1/8) = 25/72

Therfore, new profit share = 47 : 25

QUESTION: 21

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:
QUESTION: 22

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: 23

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: 24

 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. 

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QUESTION: 25

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. 

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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

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 :

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QUESTION: 28

Claim of the retiring partner is payable in the following form

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QUESTION: 29

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

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QUESTION: 30

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:

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