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Micheal Vaz solutions for 12th Board Exam Book Keeping and Accountancy chapter 4 - Reconstitution of Partnership (Retirement of Partnership)

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Micheal Vaz Micheal Vaz Class 12 Accounts - Book Keeping and Accountancy

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Chapter 4: Reconstitution of Partnership (Retirement of Partnership)

ExercisePractical Problems

Chapter 4: Reconstitution of Partnership (Retirement of Partnership) Exercise Exercise solutions [Page 127]

Exercise | Q 1 | Page 127

Answer in one sentence only.
Who is a retiring partner?

Exercise | Q 2 | Page 127

Answer in one sentence only.
What is gaining ratio?

Exercise | Q 3 | Page 127

Answer in one sentence only.
How would you treat General Reserve on retirement of a partner?

Exercise | Q 4 | Page 127

Answer in one sentence only.
How is amount due to a retiring partner settled?

Exercise | Q 5 | Page 127

Answer in one sentence only.
How would you adjust retiring partner’s share of goodwill without opening goodwill account?

Exercise | Q 6 | Page 127

Answer in one sentence only.
When is the gaining ratio to be calculated?

Chapter 4: Reconstitution of Partnership (Retirement of Partnership) Exercise Exercise solutions [Page 127]

Exercise | Q 1 | Page 127

Write the term / word / phrase which can substitute the following statement :
The account which shows revaluation of assets and liabilities.

Exercise | Q 2 | Page 127

Write the term / word / phrase which can substitute the following statement :
Debit balance of revaluation account.

Exercise | Q 3 | Page 127

Write the term / word / phrase which can substitute the following statement :
The proportion in which the continuing partners benefit due to retirement of partner.

Exercise | Q 4 | Page 127

Write the term / word / phrase which can substitute the following statement :
Excess of actual capital over proportionate capital.

Exercise | Q 5 | Page 127

Write the term / word / phrase which can substitute the following statement :
The method under which amount payable to the retiring partner is paid off at a time.

Exercise | Q 6 | Page 127

Write the term / word / phrase which can substitute the following statement :
Capital account of a retiring partner always shows balance.

Chapter 4: Reconstitution of Partnership (Retirement of Partnership) Exercise Exercise solutions [Pages 127 - 214]

Exercise | Q 1 | Page 127

Select the most appropriate answer from the alternatives given below : 
The profit or loss from revaluation on retirement of partner is shared by ___________.

  •  all the partners

  • the remaining partners

  • only retiring partner

  • none of these

Exercise | Q 2 | Page 127

Select the most appropriate answer from the alternatives given below :

X, Y, and Z are partners sharing profits in the ratio of 5:3:2. If Y retires then new ratio will be ___________.

  • 5:2

  •  5:3

  • 3:2

  • 1:1

Exercise | Q 3 | Page 127

Select the most appropriate answer from the alternatives given below :

When goodwill is raised at its full value and it is written off __________ account is to be credited.

  • Cash

  • goodwill

  • all Partners capital account

  • loan

Exercise | Q 3 | Page 214

Himanshu, Gagan and Naman are partners sharing profits and losses in the ratio of 3:2:1. On March 31, 2017, Naman retires.
The various assets and liabilities of the firm on the date were as follows:
Cash Rs 10,000, Building Rs 1,00,000, Plant and Machinery Rs 40,000, Stock Rs 20,000, Debtors Rs 20,000 and Investments Rs 30,000.
The following was agreed upon between the partners on Naman’s retirement:
(i) Building to be appreciated by 20%.
(ii) Plant and Machinery to be depreciated by 10%.
(iii) A provision of 5% on debtors to be created for bad and doubtful debts.
(iv) Stock was to be valued at Rs 18,000 and Investment at Rs 35,000.
Record the necessary journal entries to the above effect and prepare the Revaluation Account.

Exercise | Q 4 | Page 127

Select the most appropriate answer from the alternatives given below :

Increase in the value of assets should be ___________ to profit and loss adjustment account.

  • debited

  •  credited

  • added

  • none of there

Exercise | Q 5 | Page 127

Select the most appropriate answer from the alternatives given below :

If the goodwill is raised to the extent of retiring partners share ___________ account is to be debited.

  • cash

  • goodwill

  • all partner’s capital

  • retiring partners capital

Chapter 4: Reconstitution of Partnership (Retirement of Partnership) Exercise Exercise solutions [Page 127]

Exercise | Q 1 | Page 127

State whether the following statements is true or false :

Gaining ratio means old ratio minus new ratio.

  • True

  • False

Exercise | Q 2 | Page 127

State whether the following statements is true or false :

Retiring partner’s share in profit up to the date of his retirement will be debited to profit and loss suspense account.

  • True

  • False

Exercise | Q 3 | Page 127

State whether the following statements is true or false :

Amount due to a retiring partner if not paid, appears as his loan in the books of the firm.

  • True

  • False

Exercise | Q 4 | Page 127

State whether the following statements is true or false :

Revaluation account is also called Realisation account.

  • True

  • False

Exercise | Q 5 | Page 127

State whether the following statements is true or false :

Retirement of a partner leads to dissolution of the firm unless otherwise agreed upon.

  • True

  • False

Exercise | Q 6 | Page 127

State whether the following statements is true or false :

Profit on revaluation account is transferred to continuing partners’ capital account only.

  • True

  • False

Chapter 4: Reconstitution of Partnership (Retirement of Partnership) Exercise Practical Problems solutions [Pages 128 - 130]

Practical Problems | Q 1 | Page 128

Sanil, Nitish, Sapna were partners in a firm sharing profits and losses in the proportion of 1/2, 1/3 and 1/6 respectively. Their Balance Sheet as on 31st March, 2012 was as follows:

              Balance Sheet as on 31-03-2012

Liabilities Amount (Rs) Assets Amount (Rs)
Bills Payable 30000 Machinery 40000
Capitals:   Furniture 5000
Sanil 80000 Sundry Assets 60000
Nitish 50000 Stock 30000
Sapna 30000 Debtors 32000
    Bank 23000
  190000   190000

Sapna decided to retire on 1st April 2012 on following terms:-

1) Goodwill of the firm will be valued at Rs 30,000/-

2) Furniture was taken over by Sanil for Rs 4,700/-

3) Make a provision for unpaid expenses Rs 1,700/-

4) Out of the amount due to Sapna Rs 7,500/- to be paid by cheque and the remaining amount to be transferred to her loan account.

Practical Problems | Q 2 | Page 128

Pai, Amba and Manoj are partners in a firm sharing profit and losses in the proportion to their capitals. Their Balance Sheet as on 31.3.2012 is as follow: 

        Balance Sheet as on 31st March, 2012

 

Liabilities Amount (Rs) Assets Amount (Rs)
Capitals   Cash 3,000
Pai 30,000 Stock 12,000
Amba 30,000 Debtors 20,000
Manoj 15,000 Plant 13,000
Creditors 7,000 Building 20,000
Outstanding expenses 15,000 Motor Van 31,000
Profit and Loss A/c 20,000 Goodwill 18,000
  1,17,000   1,17,000

On the above date Pai retired and the following adjustments have been agreed upon

1) Goodwill was revalued at Rs 15,000

2) Assets and Liabilities were revalued as under debtors Rs 17,000 stock at 90% of book value Building Rs 35,000 Plant Rs 11,500 Motor Van Rs 29, 500, Outstanding expenses Rs 18,000

3) Amba and Manoj contributed additional capital of Rs 20,000 and Rs 10,000 respectively

4) Balance due to Mr. Pai is transferred to his loan account after paying him Rs 1,000/-

Prepare:- Profit and Loss adjustment A/c,. Partner’s Capital A/c’s and Balance Sheet of new firm

Practical Problems | Q 3 | Page 129

Shailesh, Anil and Das were partners sharing profits and losses in the ratio at 3:3:2. Their Balance Sheet as on 31.3.2012 is as below:

             Balance Sheet as on 31st March, 2012

 

Liabilities Amount (Rs) Assets Amount (Rs)
Capitals   Building 10,000
Shailesh 11,000 Machinery 10,700
Anil 15,000 Furniture 10,000
Das 8,000 Debtors 5,000
Bills Payable 1,900 Stock 6,600
Creditors 9,000 Cash 6,600
Reserve fund 4,000    
  48,900   48,900

In 1st April, 2012 Mr. Das retired from the firm on following terms:

1) Shailesh and Anil’s share in reserve fund should be continued in new firm.

2) Goodwill of the firm is to be valued at Rs 4,000 however only Das’s share in it is to be raised in the books and written off immediately

3) Assets to be revalued as under stock Rs 6,300 machinery Rs 10,000 furniture Rs 10,200

4) R.D.D. to be maintained at 10% on debtors

5) Rs 100 to be written off from creditors

6) The amount payable to Mr. Das is to be transferred to his loan account

Prepare:- Profit and Loss adjustment A/c, Partners capital A/c and Balance Sheet of New firm on 1/04/2012

Practical Problems | Q 4 | Page 129

Shedge, Mayekar and Raut were partners sharing profits and losses in the ratio of 4: 3: 3.
Their Balance Sheet on 31st March 2012 was as given below:-

             Balance Sheet as on 31st March, 2012

 

Liabilities Amount (Rs) Assets Amount (Rs)
Capitals   Furniture 4,200
Shedge 15,000 Stock 13,000
Mayekar 10,000 Debtors 10,000
Raut 10,000 Bill Receivable 18,000
    Cash/Bank 2,000
    Profit and Loss A/c (Loss) 5,800
  53,000   53,000

Raut retired from the business on above date and it was agreed that the amount due to Raut to be paid immediately by availing overdraft facility

1) His share of goodwill was raised at Rs 3,500

2) Revalue furniture Rs 4,000 and stock Rs 16,000

3) Create R.D.D. at 5% on Debtors.

4) Make provision for outstanding printing bill Rs 6,000. Prepare profit and loss adjustment A/c, Capital A/c and Balance Sheet of continuing partners assuming that goodwill is written off by the continuing partners.

Practical Problems | Q 5 | Page 130

Sathe, Deshpande and Madlani were partners sharing profits and losses in the ratio of 5:2:3. Their Balance Sheet was as follows:

             Balance Sheet as on 31st March, 2012

Liabilities Amount (Rs) Assets Amount (Rs)
Capitals   Plant and Machinery 50,000
Sathe 70,000 Building 1,00,000
Deshpande 80,000 Motor Van 20,000
Madlani 50,000 Stock 30,000
Creditors 25,000 Debtors 36,000 34,000
Bills Payable 12,000 Less : R.D.D 2,000
Reserve Fund 25,000 Cash 28,000
  2,62,000   2,62,000

Deshpande retired on that date on the following terms:

1) Plant to be depreciated by 10% and Motor Van by 20%.

2) Stock to be appreciated by 10% and building by 20%.

3) R.D.D. is no longer necessary

4) Provision is to be made for Rs 8,000 being compensation to worker

5) The goodwill of the firm to be valued at Rs 40,000 and Deshpande’s share in it should be raised.

6) Both the remaining partners decided to write off the goodwill

7) Amount payable to Shri. Deshpande to be kept as his Loan

Prepare:

1 ) Profit and Loss Adjustment Account

2) Partner’s Capital Accounts

3) New Balance Sheet

Chapter 4: Reconstitution of Partnership (Retirement of Partnership)

ExercisePractical Problems

Micheal Vaz Micheal Vaz Class 12 Accounts - Book Keeping and Accountancy

Micheal Vaz Class 12 Accounts - Book Keeping and Accountancy - Shaalaa.com

Micheal Vaz solutions for 12th Board Exam Book Keeping and Accountancy chapter 4 - Reconstitution of Partnership (Retirement of Partnership)

Micheal Vaz solutions for 12th Board Exam Accounts chapter 4 (Reconstitution of Partnership (Retirement of Partnership)) include all questions with solution and detail explanation. This will clear students doubts about any question and improve application skills while preparing for board exams. The detailed, step-by-step solutions will help you understand the concepts better and clear your confusions, if any. Shaalaa.com has the Maharashtra State Board Micheal Vaz Class 12 Accounts - Book Keeping and Accountancy solutions in a manner that help students grasp basic concepts better and faster.

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Concepts covered in 12th Board Exam Book Keeping and Accountancy chapter 4 Reconstitution of Partnership (Retirement of Partnership) are Meaning of Reconstitution, Different Ways of Reconstitution, Admission of a Partner, Need of Admission of a Partner, Capital Brought by New Partner, Admission of a Partner - Sacrifice Ratio and New Ratio, Concept of Goodwill, Admission of a Partner - Adjustment of Accumulated Profits and Losses, Admission of a Partner - Revaluation of Assets and Liabilities, Admission of a Partner - Adjustment of Capitals, Admission of a Partner - Treatment of Goodwill, Meaning of Retirement Or Death of a Partner, Needs of Retirement Or Death of a Partner, Retirement Or Death of a Partner - Treatment of Goodwill, Retirement Or Death of a Partner - Adjustment of Accumulated Profits and Losses, Retirement Or Death of a Partner - Revaluation of Assets and Liabilities, Retirement Or Death of a Partner - Adjustment of Capitals, Retirement Or Death of a Partner - New Ratio, Retirement Or Death of a Partner - Gain Ratio, Retirement Or Death of a Partner - Amount Due to Retiring Parter, Reconstitution of Partnership Examples and Solutions.

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