T.S. Grewal Class 12 Chapter 5 Q.52 - Retirement of a Partner

Question 52

Sushil, Satish and Samir are partners sharing profits in the ratio of 5 : 3 : 2. Satish retires on 1st April, 2025, on which date the capitals of Sushil, Satish and Samir after all adjustments are ₹1,03,680, ₹87,840 and ₹26,880 respectively. The Cash and Bank Balance on that date was ₹9,600. Satish is to be paid through the amount brought in by Sushil and Samir in such a way as to make their capitals proportionate to their new profit-sharing ratio of 3 : 2. Calculate the amount to be brought in by the continuing partners, assuming a minimum Cash and Bank balance of ₹7,200 is to be maintained, and pass the necessary Journal entries.

Solution

Available cash (over and above the minimum balance) = 9,600 – 7,200 = ₹2,400. Amount still required to pay Satish in full (₹87,840) = 87,840 – 2,400 = ₹85,440, to be brought in fresh by Sushil and Samir. Combined new capital of Sushil and Samir = (1,03,680 + 26,880) + 85,440 = ₹2,16,000.

ASCERTAINMENT OF CASH TO BE BROUGHT IN

Particulars	Sushil (₹)	Particulars	Samir (₹)
New Capital (2,16,000 × 3/5)	1,29,600	New Capital (2,16,000 × 2/5)	86,400
Less: Existing Capital	1,03,680	Less: Existing Capital	26,880
Cash to be brought in	25,920	Cash to be brought in	59,520

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c    Dr.		85,440
	To Sushil’s Capital A/c			25,920
	To Samir’s Capital A/c			59,520
	(Cash brought in by Sushil and Samir to make their capitals proportionate to the new ratio)
	Satish’s Capital A/c    Dr.		87,840
	To Bank A/c			87,840
	(Satish paid off in full)