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Question 17 Chapter 6 - Unimax Class 12 Part 1 - 2021
17. L, M and N are equal partners. N retires and surrenders 3/5th of his share in favour of L and 2/5th of his share in favour of M. Calculate new profit sharing ratio. Assuming that goodwill of firm is Rs. 30000 pass necessary journal entry for goodwill on retirement of N.
(i) Calculation of new profit sharing ratio :
As N has surrendered 3/5 of his share in favour of L and 2/5 of his share in favour of M, so gaining ratio is 3 : 2 (3/5 : 2/5)
L’s new share = Old share + gain
= 1/3 + (3/5 of N’s share)
= 1/3 + (3/5 of 1/3)
= 8/15
M’s new share = Old share + gain
= 1/3 + (2/5 of N’s share)
= 1/3 + (2/5 of 1/3)
= 7/15
New profit sharing ratio = 8 : 7 (L : M)
| Date | Particulars | L.F. | Debit | Credit | |
|---|---|---|---|---|---|
| L’s Capital a/c | Dr. | 6,000 | |||
| M’s Capital A/c | Dr. | 4,000 | |||
| To N’s Capital a/c | 10,000 | ||||
| (Being retiring partner N compensated by L and M in their gaining ratio) |
https://tutorstips.com/retirement-of-a-partner-explained-with-illustration/
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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