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    GCL Retirement & Death Practice Paper 1

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    Ananya Bhargava
    1. R and X will share future profits in a 7:4 ratio after L retires and his share is split between them. 2. When I retires, goodwill of ₹360,000 is recorded. H and N will now share profits equally. 3. E's executors will be paid ₹81,600 for goodwill, calculated as average profits of ₹9,000 less 10% multiplied by 2. An entry will be made to record the adjustment to goodwill. R and V will now share profits equally.

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    GCL Retirement & Death Practice Paper 1

    Uploaded by

    Ananya Bhargava
    131 views2 pages
    1. R and X will share future profits in a 7:4 ratio after L retires and his share is split between them. 2. When I retires, goodwill of ₹360,000 is recorded. H and N will now share profits equally. 3. E's executors will be paid ₹81,600 for goodwill, calculated as average profits of ₹9,000 less 10% multiplied by 2. An entry will be made to record the adjustment to goodwill. R and V will now share profits equally.

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    Gcl Retirement & Death Practice Paper 1

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    1. R and X will share future profits in a 7:4 ratio after L retires and his share is split between them. 2. When I retires, goodwill of ₹360,000 is recorded. H and N will now share profits equally. 3. E's executors will be paid ₹81,600 for goodwill, calculated as average profits of ₹9,000 less 10% multiplied by 2. An entry will be made to record the adjustment to goodwill. R and V will now share profits equally.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    131 views2 pages

    GCL Retirement & Death Practice Paper 1

    Uploaded by

    Ananya Bhargava
    1. R and X will share future profits in a 7:4 ratio after L retires and his share is split between them. 2. When I retires, goodwill of ₹360,000 is recorded. H and N will now share profits equally. 3. E's executors will be paid ₹81,600 for goodwill, calculated as average profits of ₹9,000 less 10% multiplied by 2. An entry will be made to record the adjustment to goodwill. R and V will now share profits equally.

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    © All Rights Reserved
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    of 2

    Practice Paper Series 1

    Retirement and Death of a Partner


    Marks- 20
    Question 1: R, X, L are partners in a firm sharing profits in the ratio of 13:12:11. On L’s Retirement
    his share is taken by R and X in the ratio of 7:4. What will be the new profit-sharing ratio between R
    and X? 2

    Question 2: H, I and N are partners sharing profits in the ratio of 3:2:1. I retires and on the day of his
    retirement, Goodwill is valued at ₹ 3,60,000. H and N decided to share future profits equally.
    Pass necessary Journal entry for adjustment of Goodwill. 2

    Question 3: R, E and V are partners sharing profits in the proportion of 3:2:1. Books of the firm are
    closed on 31st March, every year. E died on June 12, 2021. It was decided to value firm’s goodwill by
    taking twice the amount of the average profit of the last three years less 10%. The profits of the
    previous years ended 31st March, 2019, 31st March, 2020 and 31st March, 2021 were ₹ 8,200; ₹
    9,000; ₹ 9,800 respectively. R and V agreed to share future profits and losses equally.

    How much will R and V pay to E’s executor on account of goodwill? Also pass the Journal entry for
    the treatment of goodwill. 2

    Question 4: C, V and T are partners sharing profits in the ratio of 2: 3: 5. On 31st March 2021, the
    Balance Sheet of the firm showed Investment of ₹ 6,00,000; Investment Fluctuation Reserve of ₹
    45,000; Machinery at ₹ 2,00,000; Stock at ₹ 80,000 and Debtors at some value. C died on 12th May
    2021 and goodwill of the firm is valued at ₹ 3,50,000. Market value of Investment is ₹ 5,50,000,
    Machinery is revalued at ₹ 1,40,000 and a Provision is made for Doubtful Debts @ 5%. Stock was
    undervalued by 25,000. V’s share in loss on Revaluation was amounted to ₹ 15,000.

    Prepare Revaluation Account of the firm on death of C. 3

    Question 5: B, O, A and T are partners in a firm sharing profits and losses in the ratio of 11: 13: 17:
    19. On 1st April, 2021, A retires from the business and B, O, T decide to share future profits in the
    ratio of 3:5:2. The firm estimated the value of its Goodwill on the basis of four years’ purchase of
    super profit of the firm. The capital employed in the firm is ₹ 4,00,000 and the normal rate of return
    is 20%. Profits for the last four years ended 31st March, were: 2018: ₹ 1,35,000; 2019: ₹ 1,38,000;
    2020: ₹ 1,42,000 and 2021: ₹ 1,45,000. Calculate the value of Goodwill and pass the adjustment
    Journal entry on account of goodwill. 3

    Question 6: V, I, and P are partners in a company sharing profit and loss in the ratio of 7:5:8. On
    August 31, 2021, P died. Accounts are closed on 31st March every year. The sale for the year 2020-21
    was ₹ 8,00,000 and profits were ₹ 1,12,000. The sales for the period from April 1, 2021, to August
    31, 2021, were ₹ 4,50,000. Calculate the share of the profit of the deceased partner. 3
    Question 7: A, B, C are partners in a firm sharing profits and losses in the ratio of 11: 5: 4. Balance
    sheet of the firm as at 31st March 2021 was as follows:

    Balance Sheet as at 31st March, 2021


    Liabilities Amount Assets Amount
    Capital A/cs: Building 1,37,500
    A 1,20,000 Machinery 90,000
    B 90,000 Motor Vehicles 60,000
    C 60,000 2,70,000 Furniture 15,000
    Workmen’s Compensation Reserve 1,00,000 Debtors 1,20,000
    Creditors 1,02,500 Stock 52,500
    Bills payable 30,000 Bank 5000
    Outstanding Expenses 17,500 Profit & Loss Account 40,000
    5,20,000 5,20,000

    B who had been suffering from poor health gave a notice on 1st April, 2021 that he wished to retire
    from the firm. Following terms were agreed:
    a. Goodwill is to be valued at 2½ years’ purchase of the average profit of the last five years
    ended 31st March, which were:
    2016-17 = ₹ 50,000
    2017-18 = ₹ 40,000
    2018-19 = ₹ 80,000
    2019-20 = ₹ 70,000
    b. Building is revalued at ₹ 1,50,000; Machinery at ₹ 72,000 and Stock at ₹ 64,000.
    c. Salary due to an employee but not paid ₹ 9,000 to be recorded.
    d. ₹ 21,900 is to be paid immediately to B.
    Prepare Revaluation Account and Partners’ Capital Accounts at the time of retirement of partner. 5

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