Question 29 Chapter 6 of +2-A - T.S. Grewal 12 Class Part

Question 29 Chapter 6 of +2-A

Table of Contents

The solution of Question 29 Chapter 6 of +2-A: –

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

29. Partnership Deed of C and D, who are equal partners, has a clause that any partner may retire from the firm on the following terms by giving a six-month notice in writing: The retiring partner shall be paid−
the amount standing to the credit of his Capital Account and Current Account. b his share of profit to the date of retirement, calculated on the basis of the average profit of the three preceding completed years. c half the amount of the goodwill of the firm calculated at 1 1/2 times the average profit of the three preceding completed years. C gave a notice on 31st March 2017 to retire on 30th September 2017, when the balance of his Capital Account was 6,000 and his Current Account Dr. 500. Profits for the three preceding completed years ended 31st March, were: 2015 − 2,800; 2016 − 2,200 and 2017 − 1,600. What amount is due to C as per the partnership agreement?

The solution of Question 29 Chapter 6 of +2-A: –

C’s Capital Account
Particular	Amount	Particular	Amount
		By Balance b/d	6,000
To C’s Loan A/c	7,700	By C’s Current A/c	1,700

	7,700		7,700

C’s Current Account
Particular	Amount	Particular	Amount
To Balance b/d	500	By Profit and Loss Suspense A/c	550
To C’s Loan A/c	1,700	By D’s Current A/c	1,650

	2,200		2,200

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Working Note:-

Calculation of Profit fromApril01, 2017toSept. 30, 2017

Average Profit	=	Profit of last 3 year
		3
	=	2,800 + 2,200 + 1,600
		3
	=	Rs 2,200

C’s Profit (Share for 6 months)	=	Average Profit	x	C’s Share	x	6
						12
	=	2,200	X	1	X	6
				2		12
	=	550

Calculation of Goodwill

Goodwill = Average Profit × 1.5
= 2,200 × 1.5 = Rs 3,300

C’s Share of Goodwill	=	3,300	X	1
C’s Share of Goodwill	=	3,300	X	2

	=	Rs 1,650

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
Chapter No. 3 – Goodwill: Nature and Valuation
Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
Chapter No. 5 – Admission of a Partner
Chapter No. 6 – Retirement/Death of a Partner
Chapter No. 7 – Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

Chapter No. 8 – Company Accounts – Accounting for Share Capital
Chapter No. 9 – Company Accounts – Issue of Debentures
Chapter No. 10 – Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

Chapter No. 1 – Financial Statements of a Company
Chapter No. 2 – Financial Statement Analysis
Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
Chapter No. 4 – Accounting Ratios
Chapter No. 5 – Cash Flow Statement

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