T.S. Grewal Class 12 Chapter 5 Q.56 - Retirement of a Partner

Question 56

Amrit, Bhanu and Charu were partners sharing profits equally. Bhanu retired on 30th September, 2024. Profit till the date of retirement was to be estimated on the basis of the last year’s profit. Profit for the year ended 31st March, 2024 was ₹3,60,000. Calculate Bhanu’s share of profit till retirement and pass the Journal entry/entries when: (i) the profit-sharing ratio between Amrit and Charu does not change; and (ii) the new profit-sharing ratio between Amrit and Charu changes to 3 : 2.

Solution

Bhanu’s share of profit for 6 months (1st April to 30th September, 2024) = 3,60,000 × 1/3 × 6/12 = ₹60,000.

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
Case (i): Ratio between Amrit and Charu unchanged
	Profit & Loss Suspense A/c    Dr.		60,000
	To Bhanu’s Capital A/c			60,000
	(Bhanu’s share of profit till retirement credited, pending final accounts)
Case (ii): New ratio between Amrit and Charu changes to 3 : 2
	Amrit’s Capital A/c    Dr. (60,000 × 4/5)		48,000
	Charu’s Capital A/c    Dr. (60,000 × 1/5)		12,000
	To Bhanu’s Capital A/c			60,000
	(Bhanu compensated by Amrit and Charu in their gaining ratio 4 : 1)

Working Note: Old ratio 1 : 1 : 1. Gain: Amrit = 3/5 – 1/3 = 4/15; Charu = 2/5 – 1/3 = 1/15 → Gaining ratio 4 : 1.