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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Harish, Paresh and Mahesh were three partners sharing profits and losses in the ratio of 5 : 4 : 1. Paresh retired on 31st March, 2025. His capital as on 1st April, 2024 was ₹80,000. During the year 2024-25, he withdrew ₹5,000 and was to be charged interest on drawings of ₹100. Under the Partnership Deed, on retirement a partner is entitled to: (i) his share of capital; (ii) interest on capital @10% p.a.; (iii) his share of profit for the year of retirement; (iv) his share of goodwill; (v) his share in the profit/loss on revaluation. Additional Information: (a) Paresh’s share of profit for 2024-25 was ₹20,000. (b) Goodwill of the firm was valued at ₹24,000. (c) The firm incurred a loss of ₹12,000 on revaluation. (d) Paresh was to be paid ₹7,700 in cash and the balance transferred to his Loan Account bearing interest @ 6% p.a., repayable in two equal annual instalments, the first on 31st March, 2026. Prepare (i) Paresh’s Capital Account, and (ii) Paresh’s Loan Account till closed.
PARESH’S CAPITAL ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Drawings A/c | 5,000 | By Balance b/d | 80,000 |
| To Interest on Drawings A/c | 100 | By Interest on Capital A/c | 8,000 |
| To Revaluation A/c (share of loss) | 4,800 | By Profit & Loss Appropriation A/c (share of profit) | 20,000 |
| To Bank A/c | 7,700 | By Harish’s Capital A/c (Goodwill) | 8,000 |
| To Paresh’s Loan A/c | 1,00,000 | By Mahesh’s Capital A/c (Goodwill) | 1,600 |
| Total | 1,17,600 | Total | 1,17,600 |
PARESH’S LOAN ACCOUNT
| Date | ₹ | Date | ₹ |
|---|---|---|---|
| 2026 Mar 31 To Bank A/c (50,000 + 6,000) | 56,000 | 2025 Mar 31 By Paresh’s Capital A/c | 1,00,000 |
| 2026 Mar 31 To Balance c/d | 50,000 | 2026 Mar 31 By Interest on Loan A/c (1,00,000 × 6%) | 6,000 |
| Total | 1,06,000 | Total | 1,06,000 |
| 2027 Mar 31 To Bank A/c (50,000 + 3,000) | 53,000 | 2026 Apr 1 By Balance b/d | 50,000 |
| 2027 Mar 31 By Interest on Loan A/c (50,000 × 6%) | 3,000 | ||
| Total | 53,000 | Total | 53,000 |
Note: Goodwill share (₹24,000 × 4/10 = ₹9,600) borne by Harish and Mahesh in their gaining ratio 5 : 1 (₹8,000 and ₹1,600); Revaluation loss share = ₹12,000 × 4/10 = ₹4,800.
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.
This guide covers "T.S. Grewal Class 12 Chapter 5 Q.41 - Retirement of a Partner", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 5 - Retirement of a Partner.
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