T.S. Grewal Class 12 Chapter 5 Q.28 - Retirement of a Partner

Question 28

Asha, Naveen and Shalini were partners sharing profits in the ratio of 5 : 3 : 2. Goodwill appeared in the books at ₹80,000 and General Reserve at ₹40,000. Naveen retired. On the date of his retirement, goodwill of the firm was valued at ₹1,20,000. The new profit-sharing ratio between Asha and Shalini is 2 : 3. Record the necessary Journal entries on Naveen’s retirement.

Solution

Gain / (Sacrifice): Asha = 2/5 – 5/10 = –1/10 (Sacrifice); Shalini = 3/5 – 2/10 = 4/10 (Gain). Naveen’s share of goodwill = ₹1,20,000 × 3/10 = ₹36,000; Asha’s sacrifice = ₹1,20,000 × 1/10 = ₹12,000.

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Asha’s Capital A/c    Dr.		40,000
	Naveen’s Capital A/c    Dr.		24,000
	Shalini’s Capital A/c    Dr.		16,000
	To Goodwill A/c			80,000
	(Existing goodwill written off in the old ratio 5 : 3 : 2)
	General Reserve A/c    Dr.		40,000
	To Asha’s Capital A/c			20,000
	To Naveen’s Capital A/c			12,000
	To Shalini’s Capital A/c			8,000
	(General Reserve distributed in the old ratio 5 : 3 : 2)
	Shalini’s Capital A/c    Dr.		48,000
	To Asha’s Capital A/c			12,000
	To Naveen’s Capital A/c			36,000
	(Goodwill adjusted — gaining partner Shalini compensating sacrificing partner Asha and retiring partner Naveen)