T.S. Grewal Class 12 Chapter 5 Q.57 - Retirement of a Partner

Question 57

Amar, Bhuvi and Charan were partners sharing profits equally. Bhuvi retired on 30th September, 2024. Profit or loss till the date of retirement was to be estimated on the basis of the last year’s profit. Loss for the year ended 31st March, 2024 was ₹1,80,000. Calculate Bhuvi’s share of loss till retirement and pass the Journal entry/entries when: (i) the profit-sharing ratio between Amar and Charan does not change; and (ii) the new profit-sharing ratio between Amar and Charan changes to 3 : 2.

Solution

Bhuvi’s share of loss for 6 months (1st April to 30th September, 2024) = 1,80,000 × 1/3 × 6/12 = ₹30,000.

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
Case (i): Ratio between Amar and Charan unchanged
	Bhuvi’s Capital A/c    Dr.		30,000
	To Profit & Loss Suspense A/c			30,000
	(Bhuvi’s share of estimated loss till retirement debited to her capital, pending final accounts)
Case (ii): New ratio between Amar and Charan changes to 3 : 2
	Bhuvi’s Capital A/c    Dr.		30,000
	To Amar’s Capital A/c (30,000 × 4/5)			24,000
	To Charan’s Capital A/c (30,000 × 1/5)			6,000
	(Bhuvi’s share of loss borne by the gaining partners Amar and Charan in their gaining ratio 4 : 1)

Note: The source figure of ₹60,000 (carried over from the previous, similarly-worded question) does not apply the required 6-month proration to this question’s ₹1,80,000 loss; the correct share is ₹1,80,000 × 1/3 × 6/12 = ₹30,000, used throughout above.