Class 12 Accountancy Vol 1 Chapter 6 – Retirement/Death of a Partner
Question 1
 X, Y and Z were partners, sharing profits in the ratio of 1/2, 2/5 and 1/10. Now, find the new profit sharing ratio of the remaining partners, if –
 X retires
 Y retires
 Z retires
02. P, Q and R are partners sharing profits in the ratio of 5:4:1. Now, find the new profit sharing ratio of the remaining partners, if –
 P retires
 Q retires
 R retires
Solution:
 Step 1 – Find out the ratio in a simple figure by taking LCM. the ratio is 1/2:2/5:1/10 can be restated as 5:4:1 (considering 10 as LCM)
Step 2 – Calculate the new profit sharing ratio of the remaining partners by striking out the share of the outgoing partner. Hence,
 If X retires, then the new profit sharing ratio between Y and Z = 4:1 i.e., 4/1:1/5
 If Y retires, then the new profit sharing ratio between X and Z = 6:1 i.e, 5/6:1/6
 If Z retires, then the new profit sharing ratio between X and Y = 5:4 i.e, 5/9:4/9
 Profit sharing ratio between P, Q and R = 5:4:1
 If P retires, then the new profit sharing ratio between Q and R = 4:1 = 4/5:1/5
 If Q retires, then the new profit sharing ratio between P and R = 5:1 = 5/6:1/6
 If R retires, then the new profit sharing ratio between P and Q = 5:4 = 5/9:4/9
Question 2
D, E and F are partners sharing profits in the ratio of 1/2, 3/10 and 1/5. E retires from the firm and D & F agree to share the future profits in the ratio of 3:2. Compute the gaining ratio.
Solution:
A C
 Their new shares 3/5 2/5
 Their old shares 1/2 1/5
 Gain of a partner ( new shareold share) 3/51/2=1/10 2/51/5=2/10
Hence, gaining ratio of A and C = 1/10:2/10 = 1:2
Question 3
Amar, Akbar and Antony are partners sharing profits in the ratio of 3:2:1. Amar retires from the firm and it is ascertained that the profit sharing ratio between Akbar and Antony will be the same as existing between Amar and Akbar. Compute New ratio and Gaining ratio.
Solution:
The ratio between Amar and Akbar = 3:2. The new ratio between Akbar and Antony also will be 3:2.
Gaining Ratio =
The gain of a partner = New share – Old share
Akbar’s share = 3/5 – 2/6 = 8/30
Antony’s share = 2/5 – 1/6 = 7/30
Hence, the gaining ratio of Akbar and Antony = 8/30 : 7/30
= 8:7
Question 4
Rahul, Sachin and Sourav were partners sharing profits in the ratio of 3:2:1. Sourav retired from the firm on 1st April 2018, on which date goodwill of the enterprise was valued at ₹. 2,50,000/. Rahul and Sachin decided to share the future profits equally from the date. Pass necessary journal entries giving effect to the goodwill on Sourav’s retirement raising goodwill at its current value.
Solution:
JOURNAL ENTRIES  
Date  Particulars  L.F.  Debit  Credit  
April 1, 2018

Goodwill A/c  Dr.  2,50,000  
To Rahul’s A/c  1,25,000  
To Sachin’s A/c  83,333  
To Sourav’s A/c (Being the goodwill a/c debited with the current value of goodwill) 
41,667  
Rahul’s capital A/c  Dr.  1,25,000  
Sachin’s capital A/c  Dr.  1,25,000  
To Goodwill A/c (Being goodwill A/c written off in new profit sharing ratio of the continuing partners) 
2,50,000 
Question 5
Roger, Andy and Pete were partners sharing profits in the ratio of 3:2:1. Pete retired from the firm on 1st April, 2018 on which date goodwill of the enterprise was valued at ₹. 1,20,000/. Pass the necessary journal entries raising goodwill for the retiring partners to share in the current value of goodwill giving effect to it on Pete’s retirement.
Solution:
JOURNAL ENTRIES  
Date  Particulars  L.F  Debit  Credit  
April 1, 2018

Goodwill A/c  Dr.  20,000  
To Pete’s A/c (Being the goodwill A/c debited with Pete’s share in the current value of goodwill) 
20,000  
Roger’s capital A/c  Dr.  12,000  
Andy’s capital A/c  Dr.  8,000  
To Goodwill A/c (Being goodwill A/c written off in new profit sharing ratio of the continuing partners) 
20,000 
Question 6
A, B and C were partners sharing profits in the ratio of 2:3:5. Goodwill is appearing in their books at a value of ₹. 50,000/. A retires and on the day of A’s retirement, goodwill is valued at ₹. 45,000/. B and C decided to share future profits equally.
Solution:
JOURNAL ENTRIES  
Date  Particulars  L.F.  Debit  Credit  
April 1, 2018

A’s capital A/c  Dr.  10,000  
B’s capital A/c  Dr.  15,000  
C’s capital A/c  Dr.  25,000  
To goodwill A/c (Being goodwill appearing in the books written off in the old ratio) 
50,000  
B’s capital A/c  Dr.  9,000  
To A’s capital A/c [2/10 X 45,000]
(Being A’s share of goodwill debited to B’s capital A/c, as he alone has gained on A’s retirement) [Working Note] 
9,000 
Working Note –
Gain of a partner = New share – old share
B gains = 1/23/10 = 53/10 = 2/10
C gains = 1/25/10 = 55/10 = 0