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Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce PDF Download

Q21: 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 f 2,40,000. The new profit sharing ratio of Alok and Shiv was 2 : 3. Record necessary journal entries on Narendra’s retirement.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Working Note:
Calculation of Gaining Ratio
Gaining Ratio = New Share – Old Share
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce

Q22: Raman, Ratan and Rajan were partners sharing profits in the ratio of 4 : 2 : 1 respectively. Following was their balance sheet as at 31st March, 2013.
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
On the above date, Raman retired and following were agreed
(i) The assets and liabilities were valued as: stock ₹ 24,000; debtors ₹ 21,000; building ₹ 45,200; plant ₹ 50,000 and creditors ₹ 28,000.
(ii) Amount due to Raman will be transferred to Raman’s loan account.
Prepare revaluation account and Raman’s capital account.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce

Q23: Sameer, Yasmin and Saloni were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 3. On 31st March, 2016, their balance sheet was as follows:
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
On the above date, Sameer retired and it was agreed that
(i) Debtors of ₹ 4,000 will be written-off as bad debts and a provision of 5% on debtors for bad and doubtful debts will be maintained.
(ii) An unrecorded creditor of ₹ 20,000 will be recorded.
(iii) Patents will be completely written-off and 5% depreciation will be charged on stock, machinery and building.
(iv) Yasmin and Saloni will share the future profits in the ratio of 3 : 2.
(v) Goodwill of the firm on Sameer’s retirement was valued at ₹ 5,40,000.
Pass necessary journal entries for the above transactions in the books of the firm on Sameer’s retirement.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Working Notes:

  • Calculation of Gaining Ratio
    Gaining Ratio = New Share – Old Share
    Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
    Gaining ratio = 3 : 1
  • Provision for Bad Debts:
    Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
    Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
  • Calculation of Sameer’s Share of Goodwill
    Firm’s goodwill = ₹ 5,40,000
    Sameer’s share = 5,40,000 × (4/10) = ₹ 2,16,000
    To be contributed by Yasmin and Saloni in their gaining ratio, i.e. 3 : 1.
  • Loss on Revaluation
    It can be ascertained by preparing revaluation account in the following manner
    Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce


Q24: Lalit, Madhur and Neena were partners sharing profits as 50%, 30% and 20% respectively. On 31st March, 2013 their balance sheet was as follows
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
On this date, Madhur retired and Lalit and Neena agreed to continue on the following terms
(i) The goodwill of the firm was valued at ₹ 51,000.
(ii) There was a claim for workmen’s compensation to the extent of ₹ 6,000.
(iii) Investments were brought down to ₹ 15,000.
(iv) Provision for bad debts was reduced by ₹ 1,000.
(v) Madhur was paid ₹ 10,300 in cash and the balance was transferred to his loan account payable in two equal instalments together with interest @ 12% per annum.
Prepare revaluation account, partners capital accounts and Madhur’s loan account till the loan is finally paid off.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Working Note:
Madhur’s share in goodwill = 51,000 × (3/10) = ₹ 15,300, which is contributed by Lalit and Neenain the ratio of 5 : 2.
Lalit will pay = 15,300 × (5/7) = ₹ 10,929; Neena will pay = 15,300 × (2/7) = ₹ 4,371
Reduction in the value of investments have been adjusted through revaluation account
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce

Q25: X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2009, X retires from the firm, Y and Z agrees that the capital of the new firm shall be fixed at ₹ 2,10,000 in the profit sharing ratio. The capital accounts of Y and Z after all adjustments on the date of retirement showed balances of ₹ 1,45,000 and ₹ 63,000 respectively. State the amount of actual cash to be brought in or to be paid to the partners.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce

Q26: X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2009, Y retires form the firm. X and Z agree that the capital of the new firm shall be fixed at ₹ 2,10,000 in the profit sharing ratio. The capital accounts of X and Z after all adjustments on the date of retirement showed balances of ₹ 1,45,000 and ₹ 63,000 respectively. State the amount of actual cash to be brought in or to be paid to the partners.
Ans:
Calculation of Cash to be Brought In or Paid Out
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce

Q27: Nandan, John and Rosa are partners sharing profits in the ratio of 4 : 3 : 2. On 1st April, 2012, John gave a notice to retire from the firm. Nandan and Rosa decided to share future profits in the ratio of 1 : 1. The capital accounts of Nandan and Rosa after all adjustments showed a balance of ? 43,000 and ₹ 80,500 respectively. The total amount to be paid to John was ₹ 95,500. This amount was to be paid by Nandan and Rosa in such a way that then- capitals become proportionate to their new profit sharing ratio. Pass necessary journal entries in the books of the firm for the above transactions. Show your workings clearly.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce

Q28:Akul, Bakul and Chandan were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2018 their balance sheet was as follows
Balance Sheet of Akul, Bakul and Chandan
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Bakul retired on the above date and it was agreed that
(i) Plant and Machinery was undervalued by 10%.
(ii) Provision for doubtful debts was to be increased to 15% on debtors.
(iii) Furniture was to be decreased to ₹ 87,000.
(iv) Goodwill of the firm was valued at ₹ 3,00,000 and Bakul’s share was to be adjusted through the capital accounts of Akul and Chandan.
(v) Capital of the new firm was to be in the new profit sharing ratio of the continuing partners.
Prepare revaluation account, partners’ capital accounts and balance sheet of the reconstituted firm.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Working Notes:
1. Plant and machinery (original value) =1,80,000 x (100/90) = ₹ 2,00,000
2. Firm’s goodwill = ₹ 3,00,000
Bakul’s share of goodwill =3,00,000 x (2/5) = ₹ 1,20,000 to be contributed by Akul and Chandan in the ratio 2 : 1.
3. Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Akul’s new capital =1,50,000 x (2/3) =1,00,000 – 92,000 = ₹ 8,000 cash brought in
Chandan’s new capital =1,50,000 x (1/3) = 50,000 – 58,000 = ₹ 8,000 cash withdrew

Q29: G, E and F were partners in a firm sharing profits in the ratio of 7 : 2 : 1. The balance sheet of the firm as at 31st March, 2018 was as follows
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
E retired on the above date. On E’s retirement the following was agreed upon
(i) Land and building were revalued at ₹ 1,88,000, machinery at ₹ 76,000 and stock at ₹ 10,000 and goodwill of the firm was valued at ₹ 90,000.
(ii) A provision of 2.5% was to be created on debtors for doubtful debts.
(iii) The net amount payable to E was transferred to his loan account to be paid later on
(iv) Total capital of the new firm was fixed at ₹ 2,40,000 which will be adjusted according to their new profit sharing ratio by opening current accounts.
Prepare revaluation account, partners’ capital accounts and balance sheet of reconstituted firm.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce

Q30: Mohan, Vinay and Nitya were partners in a firm sharing profits and losses in the proportion of Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce respectively. On 31st March, 2018 their balance sheet was as follows
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Mohan retired on the above date and it was agreed that
(i) Plant and machinery will be depreciated by 5%.
(ii) An old computer previously written off was sold for ₹ 4,000.
(iii) Bad debts amounting to ₹ 3,000 will be written off and a provision of 5% on debtors for bad and doubtful debts will be maintained.
(iv) Goodwill of the firm was valued at ₹ 1,80,000 and Mohan’s share of the same was credited in his account by debiting Vinay’s and Nitya’s accounts.
(v) The capital of the new firm was to be fixed at ₹ 90,000 and necessary adjustments were to be made by bringing in or paying off cash as the case may be.
(vi) Vinay and Nitya will share future profits in the ratio of 3 : 2.
Prepare revaluation account, partners’ capital accounts and balance sheet of the reconstituted firm.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Working Notes:
1. Calculation of Gaining Ratio
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Gaining ratio = 8 : 7
2. Firm’s goodwill = 1,80,000
Mohan’s share of goodwill = 1,80,000 × (3/6) = 90,000
Lo be adjusted in gaining ratio, i.e. 8 : 7.

Q31: J, H and K were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2015 their balance sheet was as follows
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
On the above date, H retired and J and K agreed to continue the business on the following terms
(i) Goodwill of the firm was valued at ₹ 1,02,000.
(ii) There was a claim of ₹ 8,000 for workmen’s compensation.
(iii) Provision for bad debts was to be reduced by 12,000.
(iv) H will be paid ₹ 14,000 in cash and the balance will be transferred in his loan account which will be paid in four equal yearly instalments together with interest @ 10% per annum.
(v) The new profit sharing ratio between J and K will be 3 : 2 and their capitals will be in their new profit sharing ratio. The capital adjustments will be done by opening current accounts.
Prepare revaluation account, partners capital accounts and balance sheet of the new firm.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Working Notes:
1. Calculation of Gaining Ratio
Gaining Ratio = New Share – Old Share
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Gaining ratio = 1 : 2
2. Adjustment for Goodwill Firm’s goodwill = ₹ 1,02,000
H’s share of goodwill = 1,02,000 × 3/10 = ₹ 30,600 will be debited to gaining partners, i.e. J and K in gaining ratio, i.e. 1 : 2
J’s share = 30,600 × (1/3) = ₹ 10,200; K’s share = 30,600 × (2/3) = ₹ 20,400
3. Adjustment of Capital
J’s capital after adjustment = 1,36,800
(+) K’s capital after adjustment = 38,400
Total capital of new firm = ₹ 1,75,200
J’s adjusted capital = 1,75,200 × 3/5 = ₹ 1,05,120; K’s adjusted capital = 1,75,200 × 2/5 = ₹ 70,080

Q32: Leena, Madan and Naresh were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 3. On 31st March, 2015 their balance sheet was as follows
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
On 31st March, 2015, Madan retrired from the firm and the remaining partners decided to carry on the business. It was decided to revalue assets and liabilities as under
(i) Land and building be appreciated by ₹ 2,40,000 and machinery be depreciated by 10%.
(ii) 50% of investments were taken over by the retiring partner at book value.
(iii) An old customer Mohit whose account was written-off as bad debt had promised to pay ₹ 7,000 in settlement of his full debt of ₹ 10,000.
(iv) Provision for doubtful debts was to be made at 5% on debtors.
(v) Closing stock will be valued at market price which is ₹ 1,00,000 less than the book value.
(vi) Goodwill of the firm be valued at ₹ 5,60,000 and Madan’s share of goodwill be adjusted in the accounts of Leena and Naresh. Leena and Naresh decided to share future profits and losses in the ratio of 3 : 2.
(vii) The total capital of the new firm will be ₹ 32,00,000 which will be in the proportion of the profit sharing ratio of Leena and Naresh.
(viii) Amount due to Madan was settled by accepting a bill of exchange in his favour payable after 4 months.
Prepare revaluation account, partners capital accounts and balance sheet of the firm after
Madan’s retirement.
Ans:
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Working notes:
1. Calculation of Gaining Ratio
Gaining Ratio = New Share – Old Share
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
2. Calculation of Share of Goodwill
Madan’s share of goodwill = 5,60,000 × 2/7 = ₹ 1,60,000 to be contributed by Leena alone. As she is the
only gaining partner, she will compensate to Naresh also.
3. Calculation of Capital of Partners in New firm
New profit sharing ratio = 3 : 2
Leena’s capital = 32,00,000 × 3/5 = ₹ 19,20,000; Naresh’s capital = 32,00,000 x 2/5 = ₹ 12,80,000
4.
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
5. It is mentioned in the question that an old customer Mohit had promised to pay ₹ 7,000 in settlement of his debt, since it is an oral promise it is not considered as a transaction, therefore Mohit has been considered as the debtor of the firm.

Q33: Xavier, Yusuf and Zaman were partners in a firm sharing profits in the ratio of 4 : 3 : 2. On 1st April, 2014 their balance sheet was as follows
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Yusuf had been suffering from ill health and thus gave notice of reitrement from the firm. An agreement was, therefore, enterd into as on 1st April, 2014, the terms of which were as follows
(i) That land and building be appreciated by 10%.
(ii) The provision for bad debts is no longer necessary.
(iii) That stock be appreciated by 20%.
(iv) That goodwill of the firm be fixed at ₹ 54,000. Yusuf s share of the same be adjusted into Xavier’s and Zaman’s capital accounts, who are going to share future profits in the ratio of 2 : 1.
(v) The entire capital of the newly constituted firm be readjusted by bringing in or paying necessary cash so that the future capitals of Xavier and Zaman will be in their profits sharing ratio.
Prepare revaluation account and partners capital accounts.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Working notes:
1. Calculation of Gaining Ratio
Gaining Ratio = New Share – Old Share
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Gaining ratio = 2 : 1
2. Adjustment of Goodwill:
Yusuf’s share of goodwill = 54,000 x 3/5 = ₹ 18,000 to be contributed in gaining ratio, i.e. 2 : 1
Xavier will pay =18,OOO x 2/3 = ₹ 12,000; Zaman will pay = 18,000 x 1/3 = ₹ 6,000
3. Calculation of New Capitals
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Adjusted Capital of Xavier Adjusted Capital of Zaman Amount Due to Yusuf Total Capital of New Firm
Xavier’s new capital = 2,95,650 x 2/3 = ₹ 1,97,100
Zaman’s new capital = 2,95,650 x 1/3 = ₹ 98,550

Q34: Amit, Balan and Chander were partners in a firm sharing profits in the proportion of 1/2, 1/3 and 1/6 respectively. Chander retired on 1st April, 2014. The balance sheet of the firm on the date of Chander’s retirement was as follows
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
It was agreed that
(i) Goodwill will be valued at ₹ 27,000.
(ii) Depreciation of 10% was to be provided on machinery.
(iii) Patents were to be reduced by 20%.
(iv) Liability on account of provident fund was estimated at ₹ 2,400.
(v) Chander took over investments for ₹ 15,800.
(vi) Amit and Balan decided to adjust their capitals in proportion of their profit sharing ratio by opening current accounts.
Prepare revaluation account and partners’ capital accounts on Chander’s retirement.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Working Notes:
1. Adjustment for Goodwill
Chander’s share in goodwill = 27,000 x 1/6 = ₹ 4,500; to be contributed in gaining ratio, i.e. 3 : 2
Amit will pay = 4,500 x 3/5 = ₹ 2,700
Balan will pay = 4,500 x 2/5 = ₹ 1,800
2. Adjustment for Capital
Combined capital ⇒ Amit’s adjusted capital = 42,100
Balan’s adjusted capital = 37,900
Total = 80,000
New profit sharing ratio = 3 : 2
Amit’s new capital = 80,000 x 3/5 = ₹ 48,000
Chander’s new capital = 80,000 x 2/5 = ₹ 32,000

Q35: Lokesh, Mansoor and Nihal were partners in a firm sharing profits as 50%, 30% and 20% respectively. On 31st March, 2014, their balance sheet was as follows
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
On the above date, Mansoor retired and Lokesh and Nihal agreed to continue on the following terms
(i) Firm’s goodwill was valued at ₹ 1,02,000 and it was decided to adjust Mansoor’s share of goodwill into the capital accounts of the continuing partners.
(ii) There was a claim for workmen’s compensation to the extent of ₹ 12,000 and investments were brought down to ₹ 30,000.
(iii) Provision for bad debts was to be reduced by ₹ 2,000.
(iv) Mansoor was to be paid ₹ 20,600 in cash and the balance will be transferred to his loan account which was paid in two equal instalments together with interest @ 10% per annum.
(v) Lokesh’s and Nihal’s capitals were to be adjusted in their new profit sharing ratio by bringing in or paying off cash as the case may be.
Prepare revaluation account and partners’ capital accounts.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Working Notes:
1. Calculation of Share of Goodwill
Mansoor’s share of goodwill = 1,02,000 × 3/10 = ₹ 30,600, to be contributed by Lokesh and Nihal in gaining ratio, i.e. 5 : 2
Lokesh will pay = 30,600 × 5/7 = ₹ 21,857; Nihal will pay = 30,600 x 2/7 = ₹ 8,743
2. Calculation of Capital of New Firm after Mansoor’s Retirement
Lokesh’s capital after adjustment = 68,143
Nihal’s capital after adjustment = 21,257
total = ₹ 89,400
Lokesh’s new capital = 89,400 × 5/7 = ₹ 63,857
Nihal’s new capital =89,400 × 2/7 = ₹ 25,543

Q36: L, M and N were partners in a firm sharing profits in the ratio of 2 : 1 : 1. On 1st April, 2013 their balance sheet was as follows
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
On the above date, N retired. The following were agreed
(i) Goodwill of the firm was valued at ₹ 6,00,000.
(ii) Land was to be appreciated by 40% and building was to be depreciated by ₹ 1,00,000.
(iii) Furniture was to be depreciated by ₹ 30,000.
(iv) The liabilities for workmen’s compensation fund was determined at ₹ 1,60,000.
(v) Amount payable to N was transferred to his loan account.
(vi) Capitals of L and M were to be adjusted in their new profit sharing ratio and for this purpose current accounts of the partners will be opened.
Prepare revaluation account, partner’s capital accounts and the balance sheet of the new firm.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Working Notes:
1. Firm’s goodwill = ₹ 6,00,000
N’s share of goodwill = 6,00,000 × 1/4 = 1,50,000 to be contributed by L and M in gaining ratio i.e., 2 : 1
L = 1,50,000 × 2/3 = ₹ 1,00,000, M = 1,50,000 × 1/3 = ₹ 50,000
2. Calculation of Proportionate’s Capital
L’s capital after all adjustment = 9,15,000
M’s capital after all adjustment = 6,37,500
Total capital of new firm = ₹ 15,52,500
L’s new capital =15,52,500 x 2/3 = ₹ 10,35,000
M’s new capital =15,52,500 x 1/3 = ₹ 5,17,500

Q37: Kushal, Kumar and Kavita were partners in a firm sharing profits in the ratio of 3 : 1 : 1. On 1st April, 2012 their balance sheet was as follows
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
On the above date, Kavita retired and the following was agreed
(i) Goodwill of the firm was valued at ₹ 40,000.
(ii) Land was to be appreciated by 30% and building was to be depreciated by ₹ 1,00,000.
(iii) Value of furniture was to be reduced by ₹ 20,000.
(iv) Bad debts reserve is to be increased to ₹ 15,000.
(v) 10% of the amount payable to Kavita was paid in cash and the balance was transferred to her loan account.
(vi) Capitals of Kushal and Kumar will be in proportion to their new profit sharing ratio. The surplus/deficit, if any in their capital accounts will be adjusted through current accounts.
Prepare revaluation account, partner’s capital accounts and balance sheet of Kushal and Kumar after Kavita’s retirement.
Ans:

Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Working Note:
1. Finn’s goodwill = ₹ 40,000
Kavita’s share of goodwill – 40,000 × 1/5 = ₹ 8,000, to be contributed by Kushal and Kumar in gaining ratio, i.e. 3 : 1; Kushal = 8,000 × 3/4 = ₹ 6,000; Kumar = 8,000 × 1/4 = ₹ 2,000
2. Adjustment of Capital
Adjusted capital of Kushal = 3,63,000
Adjusted capital of Kumar = 3,01,000 ₹
Total = 6,64,000
New profit sharing ratio = 3 : 1
New capital of Kushal = 6,64,000 × 3/4 = ₹ 4,98,000
New capital of Kumar = 6,64,000 × 1/4 = ₹ 1,66,000

Q38: State the basis of calculating the amount of profit payable to the legal representative of a deceased partner in the year of death.
Ans:
Amount of profit can be calculated on time basis or sales basis.

Q39: Dinkar, Navita and Vani were partners sharing profits and losses in the ratio of 3 : 2 : 1. Navita died on 30th June, 2017. Her share of profit for the intervening period was based on the sales during that period, which were ₹ 6,00,000. The rate of profit during the past four years had been 10% on sales. The firm closes its books on 31st March every year.
Calculate Navita’s share of profit.
Ans:
Total sales = ₹ 6,00,000 (1st April, 2017-30th June, 2017)
Finn’s profit on sales = 600000 × 10% = ₹ 60,000
Navita’s share of profit = 60000 × 2/6 = ₹ 20,000

Q40: Jayant, Kartik and Leena were partners in a firm sharing profits and losses in the ratio of 6 : 2 : 3. Kartik died and Jayant and Leena decided to continue the business. Their gaining ratio was 2 : 3. Calculate the new profit sharing ratio of Jayant and Leena.
Ans:
Jayant’s old share = 5/10 Jayant’s gaining share = Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Jayant’s New Share = Old Share + Gaining share = Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Leena’s old share = 3/10; Leena’s gaining share = Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
Leena s new share = Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce
New profit sharing ratio = Jayant : Leena = 29 : 21.

The document Worksheet Solutions: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- 2 | Accountancy Class 12 - Commerce is a part of the Commerce Course Accountancy Class 12.
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1. What is the process of reconstitution of a partnership firm due to retirement or death of a partner?
Ans. The process of reconstitution of a partnership firm due to retirement or death of a partner involves several steps. Firstly, the retiring or deceased partner's capital and profit/loss sharing ratio should be determined. Then, the firm's assets and liabilities are revalued to determine their current values. The remaining partners then adjust their capital accounts based on the new profit/loss sharing ratio. If necessary, a new partner may be admitted to the firm. Finally, the retiring or deceased partner's capital is settled by paying out their share or transferring it to their legal heir.
2. How is the retiring partner's capital settled in a reconstituted partnership firm?
Ans. The retiring partner's capital is settled in a reconstituted partnership firm by either paying out their share or transferring it to their legal heir. If the retiring partner chooses to withdraw their capital, the firm will pay them the agreed-upon amount in cash or through installments. On the other hand, if the retiring partner's capital is transferred to their legal heir, the heir becomes a new partner in the firm and their capital account is credited with the value of the transferred capital.
3. Can a new partner be admitted to a partnership firm during the reconstitution process?
Ans. Yes, a new partner can be admitted to a partnership firm during the reconstitution process. If the remaining partners decide to admit a new partner to the firm, they need to negotiate and agree upon the terms and conditions of the admission. These terms may include the new partner's capital contribution, profit/loss sharing ratio, and any other rights and responsibilities. Once the terms are agreed upon, the new partner's capital account is credited with their capital contribution, and they become a part of the reconstituted partnership firm.
4. What is the purpose of revaluing the assets and liabilities during the reconstitution process?
Ans. The purpose of revaluing the assets and liabilities during the reconstitution process is to determine their current values. Over time, the value of assets and liabilities may change due to factors such as depreciation, appreciation, or changes in market conditions. By revaluing these items, the firm can ensure that the partners' capital accounts are adjusted accurately based on their current values. This helps in maintaining fairness and transparency in the reconstitution process.
5. How does the profit/loss sharing ratio change in a reconstituted partnership firm?
Ans. The profit/loss sharing ratio in a reconstituted partnership firm may change due to the retirement or death of a partner. The remaining partners need to agree upon a new profit/loss sharing ratio based on the revised capital accounts and any new partners admitted to the firm. The new ratio determines how the profits or losses of the firm will be distributed among the partners. It is essential to ensure that the new ratio reflects the partners' capital contributions and any changes in their roles or responsibilities in the reconstituted partnership firm.
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