Accountancy

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 Rs. 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.

SOLUTION

Continue ReadingP, 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 Rs. 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.

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.

SOLUTION Old Ratio (A, B and C)  =  4 : 3 : 2B retires from the firm.His profit share  =  3/9Case (a) B gives his share to A and C in their…

Continue ReadingA, 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.

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.

SOLUTION Old Ratio = 3: 4: 1Murli's share = 3/8Share acquired by Naveen = 3/8 × 2/3 = 2/8Remaining Share = 3/8−2/8 = 1/8 (acquired by Omprakash)Gaining Ratio = 28: 18 = 2: 1Naveen's New Share = 4/8+2/8 = 6/8Omprakash's New Share =…

Continue ReadingMurli, 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.

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.

SOLUTION Calculation of Gaining RatioP: Q :R = 7: 5: 3 (Old ratio)Q: R = 7: 5 (New ratio, same as between P & Q)Gaining Ratio = New Ratio - Old RatioQ's Gain = 7/12−5/15 = 35−20/60 = 15/60R's Gain = 5/12−3/15 = 25−12/60 = 13/60Q: R = 15: 13

Continue ReadingP, 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.

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.

SOLUTION Old Ratio (A, B and C) = 5: 3: 2C retires from the firm.His profit share = 210C’s share is taken by A in entiretyNew Ratio = Old Ratio +…

Continue ReadingA, 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.

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.

SOLUTION Old Ratio (A, B and C)  =  8 : 4 : 3B retires from the firm.His profit share  =  4/15B’s share taken by A and C in ratio of 1: 1Share taken by A…

Continue ReadingA, 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.

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.

SOLUTION Kumar's share = 3/10acquired by Lakshya and Manoj in 3: 2Share acquired by Lakshya = 3/10 × 3/5 = 9/50Share acquired by Manoj = 3/10 × 2/5 = 6/50Lakshya's New Share = 2/10+9/50 = 19/50Manoj's New Share = 1/10+6/50 = 11/50Naresh's share (as retained) = 4/10 or 20/50 New Profit-Sharing Ratio = 19:…

Continue ReadingKumar, 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.

(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.

SOLUTION (a)Old Ratio (W, X, Y and Z) = of 1/3; 1/6: 1/3; 1/6 or 2 : 1 : 2 : 1New Ratio (W, X and Z) = 1 : 1…

Continue Reading(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.

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.

SOLUTION Old Ratio (A, B and C) = 4 : 3 : 2New Ratio (B and C) = 2 : 1Gaining Ratio = New Ratio − Old RatioB’s gain = 2/3-3/9 = 6-3/9 =…

Continue ReadingA, 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.