TS Grewal chapter 6 – Retirement of a Partner, Question 15 to Question 21 solution of the 2021-22 Edition.
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Q.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.
SOLUTION:-
Working Notes:
WN.1– Calculation of Manisha’s Share in Goodwill
Manisha’s share = Firm’s Goodwill × Manisha’s Profit ShareManisha’s share
= 1,80,000 × 13 = 60,000
WN.2– Calculation of Gaining Ratio
Gaining Ratio = New Ratio − Old Ratio
Aparna’s gain = 3/5 − 3/6 = 3/30
Sonia’s gain = 2/5 − 1/6 = 7/30
Gaining Ratio = 3:7
Aparna’s share = 60,000 × 3/10 = 18,000
Sonia’s share = 60,000 × 7/10 = 42,000
| Date | Particulars | L.F. | Amt ( ₹) | Amt ( ₹) |
| Aparna’s Capitals A/c…Dr. | 18,000 | |||
| Sonia’s Capital A/c…Dr. | 42,000 | |||
| To Manisha’s Capital A/c | 60,000 |
Q.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.
SOLUTION:-
Working Notes:
WN.1- Calculation of Gaining Ratio
Old Ratio (A, B and C) = 3 : 2 : 1
B retires from the firm.
New Ratio (A and C) = 2 : 1
Gaining Ratio = New Ratio − Old Ratio
A‘s share = 2/3 – 3/6 = 4-3/6 =1/6
B‘s share = 1/3 -1/6 = 2-1/6 = 1/6
∴Gaining Ratio = 1 : 1
WN.2- Adjustment of Goodwill
Goodwill of the firm = ₹ 90,000
B’s share of goodwill = 90,000 × 2/3 = 30,000
This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 1 : 1).
A’s and C’s capital will be debited = 30,000 × 1/2 = 15000
| Date | Particulars | L.F. | Debit ₹ | Credit ₹ |
| A’s Capital A/c…Dr. | 15,000 | |||
| C’s Capital A/c…Dr. | 15,000 | |||
| To B’s Capital A/c | 30,000 |
Q.17- Aman, Bimal and Deepak are partners sharing profits in the ratio of 2: 3: 5. The goodwill of the firm has been valued at ₹ 37,500. Aman retired. Bimal and Deepak decided to share profits equally in future. Calculate gain/sacrifice of Bimal and Deepak on Aman’s retirement and also pass necessary Journal entry for the treatment of goodwill.
SOLUTION:-
Working notes:
WN.1-
Calculation of gaining and sacrificing ratio
| Aman | Bimal | Deepak | |
| Old ratio | 2 | 3 | 5 |
| New ratio | Retires | 1 | 1 |
Bimal = 3/10 – 1/2 = 3-5/10 = -2/10
Deepak = 5/10 – 1/2 = 5-5/10 = 0/10
Gaining ratio of Sunil and David = 13:11
WN.2-
Firms goodwill = 37,500
Share of retiring partner Amal is 2/10
Share of Amal share = 37,500 × 2/10 = 7,500
Bimal will compensate 7,500
| Date | Particulars | L.F. | Debit ( ₹) | Credit ( ₹) |
| Bimal’s capital a/c …Dr. | 7,500 | |||
| To Amal’s capital a/c | 7,500 |
Q.18- 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.
SOLUTION:-
Working Notes:
WN1– Calculation of Pammy’s Share in Goodwill
Pammy’s share = Firm’s Goodwill × Pammy’s Profit SharePammy’s share = 84,000 × 26 = 28,000 to be borne by gaining partners in gaining ratio
WN2: Calculation of Gaining Ratio
Gaining Ratio = New Ratio − Old Ratio
Hanny’s gain = 2/3 − 3/6 = 1/6
Sunny’s gain = 1/3 − 1/6 = 1/6
Gaining Ratio=1:1
| Date | Particulars | L.F. | Debit Amount ( ₹) | Credit Amount ( ₹) |
| 1 | Hanny’s Capital A/c …dr. | 30,000 | ||
| Pammy’s Capital A/c …dr. | 20,000 | |||
| Sunny’s Capital A/c …dr. | 10,000 | |||
| To Goodwill A/c | 60,000 | |||
| 2 | Hanny’s Capital A/c …dr. | 14,000 | ||
| Sunny’s Capital A/c …dr. | 14,000 | |||
| To Pammy’s Capital A/c | 28,000 |
Q.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.
SOLUTION:-
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 ₹ 1,50,000
B’s capital after making necessary adjustments ₹ 1,39,200
Therefore, Hidden Goodwill is ` (1,50,000 – 1,39,200) i.e. ₹ 10,800
(ii) Gaining Ratio
New profit sharing ratio between A and B is 5:3
A’s Gain = 5/8 – 5/9 = 13/72
C’s Gain= 3/8 – 2/9 = 11/72
gaining ratio 13:11
Thus, B’s share of goodwill will be brought in by A and C in the gaining ratio 13:11 i.e.
A’s capital will be debited = 10,800 × 13/24 = ₹ 5850
C’s capital will be debited = 10,800 × 11/24 = ₹ 4950
Journal
| Date | Particulars | L.F. | Debit Amount ₹ | Credit Amount ₹ |
| A’s Capital A/c..dr. | 5,850 | |||
| C’s Capital A/c..dr. | 4,950 | |||
| To B’s Capital A/c | 10,800 |
Q.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.
SOLUTION:-
Working Notes:
WN1- Calculation of Gaining Ratio
M : N :O = 3:2:1 (Old ratio)
M :O = 1:1 (New ratio)
Gaining Ratio = New Ratio – Old Ratio
M’s Gain = 1/2 − 3/6 = 3−3/6 = 0
O’s Gain =1/2 − 1/6 = 3−1/6 = 2/6
WN2- Calculation of Retiring Partner’s Share of Goodwill
N’s share of goodwill = 60,000 × 2/6 = ₹ 20,000
N’s share of goodwill will be brought by O only.
Therefore, O’s Capital A/c will be debited with ₹ 20,000
| Date | Particulars | L.F. | Debit Amount (₹) | Credit Amount (₹) |
| O’s Capital A/c…dr. | 20,000 | |||
| To N’s Capital A/c | 20,000 |
Q.21- A, B, C and D are partners in a firm sharing profits, in the ratio of 2 : 1 : 2 : 1. On the retirement of C, Goodwill was valued ₹ 1,80,000. A, B and D decide to share future profits equally. Pass the necessary Journal entry for the treatment of goodwill.
Solution:-
Working Notes:
WN1- Calculation of Gaining Ratio
A : B :C : D =2:1:2:1(Old ratio)
A :B : D = 1:1:1(New ratio)
Gaining Ratio = New Ratio – Old Ratio
A’s Gain = 1/3 − 2/6 = 2−2/6 = 0
B’s Gain =1/3 − 1/6 = 2−1/6 = 1/6
D’s Gain = 1/3 − 1/6 = 2−1/6 = 1/6
A:B:D = 0:1:1
WN2- Calculation of Retiring Partner’s Share of Goodwill
C’s share of goodwill = 1,80,000 × 2/6 = ₹ 60,000
C’s share of goodwill will be brought by B and D in their gaining ratio 1:1
Therefore, B’s Capital A/c will be debited with 60,000 × 1/2= ₹ 30,000
And, D’s Capital A/c will be debited with 60,000 × 1/2 = ₹ 30,000
| Date | Particulars | L.F. | Debit Amount (₹) | Credit Amount (₹) |
| B’s Capital A/c…dr. | 30,000 | |||
| D’s Capital A/c…dr. | 30,000 | |||
| To C’s Capital A/c | 60,000 |