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Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce PDF Download

Page No 6.77:

Question 1: A, B and C were partners sharing profits in the ratio of 1/2, 2/5 and 1/10. Find the new ratio of the remaining partners if C retires.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
As we can see, no information is given as to how A and B are acquiring C's profit share after his retirement, so the new profit sharing ratio between A and B is calculated just by crossing out the C’s share. That is, the new ratio becomes 5 : 4.
∴ New Profit Ratio (A and B) = 5 : 4

Page No 6.77:

Question 2: From the following particulars, calculate new profit-sharing ratio of the partners:
(a) Shiv, Mohan and Hari were partners in a firm sharing profits in the ratio of 5 : 5 : 4. Mohan retired and his share was divided equally between Shiv and Hari.
(b) P, Q and R were partners sharing profits in the ratio of 5 : 4 : 1. P retires from the firm.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
(b) Old Ratio (P, Q and R) = 5 : 4 : 1
P’s Profit Share =
As we can see, no information is given as to how Q and R are acquiring P's profit share after his retirement, so the new profit sharing ratio between Q and R is calculated just by crossing out the P’s share. That is, the new ratio becomes 4 : 1
∴ New Profit Ratio (Q and R) = 4 : 1

Page No 6.77:

Question 3: R, S and M are partners sharing profits in the ratio of 2/5, 2/5 and 1/5. M decides to retire from the business and his share is taken by R and S in the ratio of 1 : 2. Calculate the new profit-sharing ratio.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.77:

Question 4: A, B and C were partners sharing profits in the ratio of 4 : 3 : 2. A retires, assuming B and C will share profits in the ratio of 2 : 1. Determine the gaining ratio.
ANSWER:
Old Ratio (A, B and C) = 4 : 3 : 2
New Ratio (B and C) = 2 : 1
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.77:

Question 5: X, Y and Z are partners sharing profits in the ratio of 1/2, 3/10, and 1/5. Calculate the gaining ratio of remaining partners when Y retires from the firm.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.77:

Question 6: (a) W, X, Y and Z are partners sharing profits and losses in the ratio of 1/3, 1/6, 1/3 and 1/6 respectively. Y retires and W, X and Z decide to share the profits and losses equally in future.
Calculate gaining ratio.
(b) A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 2. C retires from the business. A is acquiring 4/9 of C's share and balance is acquired by B. Calculate the new profit-sharing ratio and gaining ratio.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.78:

Question 7: Kumar, Lakshya, Manoj and Naresh are partners sharing profits in the ratio of 3 : 2 : 1 : 4. Kumar retires and his share is acquired by Lakshya and Manoj in the ratio of 3 : 2. Calculate new profit-sharing ratio and gaining ratio of the remaining partners.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.78:

Question 8: A, B, and C were partners in a firm sharing profits in the ratio of 8 : 4 : 3. B retires and his share is taken up equally by A and C. Find the new profit-sharing ratio.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.78:

Question 9: A, B, and C are partners sharing profits in the ratio of 5 : 3 : 2. C retires and his share is taken by A. Calculate new profit-sharing ratio of A and B.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.78:

Question 10: P, Q and R are partners sharing profits in the ratio of 7 : 5 : 3. P retires and it is decided that profit-sharing ratio between Q and R will be same as existing between P and Q. Calculate New profit-sharing ratio and Gaining Ratio.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.78:

Question 11: Murli, Naveen and Omprakash are partners sharing profits in the ratio of 3/8, 1/2 and 1/8. Murli retires and surrenders 2/3rd of his share in favour of Naveen and remaining share in favour of Omprakash. Calculate new profit-sharing ratio and gaining ratio of the remaining partners.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.78:

Question 12: A, B and C are partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2. B decides to retire from the firm. Calculate new profit-sharing ratio of A and C in the following circumstances:
(a) If B gives his share to A and C in the original ratio of A and C.
(b) If B gives his share to A and C in equal proportion.
(c) If B gives his share to A and C in the ratio of 3 : 1.
(d) If B gives his share to A only.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.78:

Question 13: L, M and O are partners sharing profits and losses in the ratio of 4 : 3 : 2. M retires and the goodwill is valued at ₹ 72,000. Calculate M's share of goodwill and pass the Journal entry for Goodwill. L and O decided to share the future profits and losses in the ratio of 5 : 3.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - CommercePage No 6.78:

Question 14: P, Q, R and S were partners in a firm sharing profits in the ratio of 5 : 3 : 1 : 1. On 1st January, 2019, S retired from the firm. On S's retirement, goodwill of the firm was valued at ₹ 4,20,000. New profit-sharing ratio among P, Q and R will be 4 : 3 : 3.
Showing your working notes clearly, pass necessary Journal entry for the treatment of goodwill in the books of the firm on S's retirement.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.78:

Question 15: Aparna, Manisha and Sonia are partners sharing profits in the ratio of 3 : 2 : 1. Manisha retired and goodwill of the firm is valued at ₹ 1,80,000. Aparna and Sonia decided to share future profits in the ratio of 3 : 2. Pass necessary Journal entries.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - CommerceRetirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.78:

Question 16: A, B and C are partners sharing profits in the ratio of 3 : 2 : 1. B retired and the new profit-sharing ratio between A and C was 2 : 1. On B's retirement, the goodwill of the firm was valued at ₹ 90,000. Pass necessary Journal entry for the treatment of goodwill on B's retirement.
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.79:

Question 17: Hanny, Pammy and Sunny are partners sharing profits in the ratio of 3 : 2 : 1. Goodwill is appearing in the books at a value of  ₹ 60,000. Pammy retires and at the time of Pammy's retirement, goodwill is valued at ₹ 84,000. Hanny and Sunny decided to share future profits in the ratio of 2 : 1. Record the necessary Journal entries. 
ANSWER:
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Working Notes:
WN1: Calculation of Pammy’s Share in Goodwill
Pammy's share=Firm's Goodwill×Pammy's Profit Share
Pammy's share=84,000×2/6=28,000 (to be borne by gaining partners in gaining ratio)
WN2: Calculation of Gaining Ratio
Gaining Ratio = New Ratio − Old Ratio
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Gaining Ratio=1:1

Page No 6.79:

Question 18: X, Y and Z are partners sharing profits in the ratio of 3 : 2 : 1. Goodwill is appearing in the books at a value of ₹ 60,000. Y retires and at the time of Y's retirement, goodwill is valued at ₹ 84,000. X and Z decided to share future profits in the ratio of 2 : 1. Pass the necessary Journal entries through Goodwill Account.
ANSWER: 
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Working Notes:
WN1: Calculation of Gaining Ratio
X :Y :Z=3:2:1(Old ratio)
X :Z = 2:1(New ratio)
Gaining Ratio = New Ratio - Old Ratio
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
X:Z=1:1
WN2: Calculation of Retiring Partner’s Share of Goodwill
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.79:

Question 19: A, B and C are partners sharing profits in the ratio of 4/9 : 3/9 : 2/9. B retires and his capital after making adjustments for reserves and gain (profit) on revaluation stands at ₹ 1,39,200. A and C agreed to pay him ₹ 1,50,000 in full settlement of his claim. Record necessary Journal entry for adjustment of goodwill if the new profit-sharing ratio is decided at 5 : 3.
ANSWER:

Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Working Notes 
i. Calculation of B’s share of goodwill
A, B and C are sharing profits in ratio 4/9 : 3/9 : 2/9
B retires from the firm. Remaining partners agreed to pay him Rs 1,50,000
B’s capital after making necessary adjustments Rs 1,39,200
Therefore, Hidden Goodwill is Rs (1,50,000 – 1,39,200) i.e. Rs 10,800
ii Gaining Ratio
New profit sharing ratio between A and B is 5:3
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Thus, B’s share of goodwill will be brought in by A and C in the gaining ratio 13:11 i.e.
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce

Page No 6.79:

Question 20: M, N and O are partners in a firm sharing profits in the ratio of 3 : 2 : 1. Goodwill has been valued at ₹ 60,000. On N's retirement, M and O agree to share profits equally. Pass the necessary Journal entry for treatment of N's share of goodwill.
ANSWER:

Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce
Retirement/Death of a Partner (Part - 1) | Accountancy Class 12 - Commerce 

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FAQs on Retirement/Death of a Partner (Part - 1) - Accountancy Class 12 - Commerce

1. What is retirement?
Ans. Retirement is the phase of life when an individual voluntarily stops working and transitions from active employment to a more leisurely lifestyle. It is usually associated with reaching a certain age, such as 65, or meeting specific criteria set by an employer or government.
2. How does retirement impact financial planning?
Ans. Retirement significantly affects financial planning as it requires individuals to consider their sources of income, such as pensions, savings, and investments, to sustain their desired lifestyle during retirement. Planning for retirement involves estimating future expenses, managing debts, maximizing retirement savings, and exploring options for income generation.
3. What is the importance of retirement savings?
Ans. Retirement savings are crucial as they provide a financial cushion during retirement when individuals no longer have regular employment income. Building a retirement nest egg ensures a comfortable lifestyle, covers unexpected expenses, and allows individuals to pursue their retirement goals and aspirations without financial stress.
4. What are some common retirement planning mistakes to avoid?
Ans. Some common retirement planning mistakes to avoid include not starting early enough to save for retirement, underestimating future expenses, relying solely on government pensions, overlooking healthcare costs, and not regularly reviewing and adjusting retirement savings strategies.
5. What happens to retirement savings in the event of a partner's death?
Ans. In the event of a partner's death, retirement savings can be impacted depending on the circumstances. If the deceased partner had named the surviving partner as a beneficiary, the retirement savings may transfer to the surviving partner. However, if no beneficiary was named or the surviving partner is not eligible for the funds, the retirement savings may pass to the deceased partner's estate or be subject to specific rules and regulations depending on the retirement account type. It is crucial to consult with financial advisors or estate planners to understand the implications and ensure appropriate planning for such scenarios.
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