Q21 to 30 Retirement of a Partner TS Grewal Solutions 2025-26

In this article, I have provided Q21 to 30 Retirement of a Partner TS Grewal Solutions 2025-26. You can find the solutions of specifically Q1 to Q10 here. If you have any doubts regarding any of these questions, you can ask in the comments. I will try to resolve your doubts as soon as possible.

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Question 21: (M, N, and O)

M, N and O are partners in a firm sharing profits in the ratio of 3 : 2 : 1. Goodwill has been valued at ₹60,000. On N’s retirement, M and O agree to share profits equally.

Pass the necessary Journal entry for treatment of N’s share of goodwill.

Answer:

Journal
Date	Particulars		L.F.	Debit (₹)	Credit (₹)

	O’s Capital A/c	Dr.		20,000
	To N’s Capital A/c				20,000
	(Being Adjustment of N’s share of goodwill)

Working Notes:

WN1:Calculation of Gaining Ratio

M :N :O=3:2:1(Old ratio)

M :O =1:1(New ratio)

Gaining Ratio = New Ratio – Old Ratio

M’s Gain =1/2−3/6=3−3/6=0

O’s Gain=1/2−1/6=3−1/6=2/6

WN2: Calculation of Retiring Partner’s Share of Goodwill

N’s share of goodwill=60,000×2/6=₹ 20,000

N’s share of goodwill will be brought by O only.

Therefore, O’s Capital A/c will be debited with ₹ 20,000

Question 22: (A, B, C, and D)

A, B, C and D are partners in a firm sharing profits, in the ratio of 2 : 1 : 2 : 1. On the retirement of C, Goodwill was valued ₹ 1,80,000. A, B and D decide to share future profits equally. Pass the necessary Journal entry for the treatment of goodwill.

Answer:

Journal
Date	Particulars		L.F.	Debit (₹)	Credit (₹)
	B’s Capital A/c	Dr		30,000
	D’s Capital A/c	Dr.		30,000
	To C’s Capital A/c				60,000
	(Being Adjustment of C’s share of goodwill)

Working Notes:

WN1: Calculation of Gaining Ratio

A :B :C :D=2:1:2:1(Old ratio)

A :B =1:1:1(New ratio)

Gaining Ratio = New Ratio – Old Ratio

A’s Gain =1/3−2/6=2−2/6=0

B’s Gain =1/3−1/6=2−1/6=1/6

D’s Gain =1/3−1/6=2−1/6=1/6

A:B:D=0:1:1

WN2: Calculation of Retiring Partner’s Share of Goodwill
C’s share of goodwill=1,80,000×2/6=₹ 60,000

C’s share of goodwill will be brought by B and D in their gaining ratio1:1

Therefore, B’s Capital A/c will be debited with 60,000×1/2=₹ 30,000

And, D’s Capital A/c will be debited with 60,000×1/2=₹ 30,000

Question 23: (A, B, and C)

A, B and C were partners in a firm sharing profits in the ratio of 6 : 5 : 4. Their capitals were A − ₹1,00,000; B − ₹80,000 and C − ₹60,000 respectively. On 1st April, 2009, A retired from the firm and the new profit sharing ratio between B and C was decided as 1 : 4. On A‘s retirement, the goodwill of the firm was valued at ₹1,80,000. Showing your calculations clearly, pass the necessary Journal entry for the treatment of goodwill on A’s retirement.

Answer:

Journal
Date	Particulars		L.F.	Debit (₹)	Credit (₹)
	C’s Capital A/c	Dr.		96,000
	To A’s Capital A/c				72,000
	To B’s Capital A/c				24,000
	(Being Adjustment of A’s and B’s share of goodwill)

Working Notes:

WN1: Calculation of Gaining Ratio

A :B :C=6:5:4(Old ratio)

B :C=1:4 (New ratio)

Gaining Ratio = New Ratio – Old Ratio

B’s Gain =1/5−5/15=3−5/15= −2/15(Sacrifice)

C’s Gain =4/5−4/15=1/2−4/15=8/15

WN2: Calculation of Retiring Partner’s Share of Goodwill

A’s share of goodwill=1,80,000×6/15= ₹72,000

B’s share of goodwill=1,80,000×2/15= ₹24,000

A’s and B’s share of goodwill be brought by C only. Therefore, C’s Capital A/c will be debited with 72,000+24,000 = ₹96,000

Question 24: (Sangeeta, Saroj, and Shanti)

Sangeeta, Saroj and shanti are partners sharing profits and losses in the ratio of 5 : 3 : 2. Z retired and on the date of his retirement, following adjustments were agreed upon:
(a) The value of Furniture is to be increased by ₹12,000.
(b) The value of stock to be decreased by ₹10,000.
(c) Machinery of the book value of ₹50,000 is to be depreciated by 10%.
(d) A Provision for Doubtful Debts @5% is to be created on debtors of book value of ₹40,000.
(e) Unrecorded Investment worth ₹10,000.
(f) An item of ₹1,000 included in bills payable is not likely to be claimed, hence should be written back.
Pass necessary Journal entries.

Answer:

Revaluation Account
Dr.					Cr.
Particulars		₹	Particulars	₹
Stock A/c		10,000	Furniture A/c	12,000
Machinery A/c		5,000	Investments A/c	10,000
Provision for Doubtful Debts A/c		2,000	Bills Payable A/c	1,000
Profit transferred to:
X’s Capital A/c	3,000
Y’s Capital A/c	1,800
Z’s Capital A/c	1,200	6,000
		23,000		23,000

Journal
Date	Particulars		L.F.	Debit (₹)	Credit (₹)
(a)	Furniture A/c	Dr.		12,000
	To Revaluation A/c				12,000
	(Being Increase in value transferred to Revaluation Account)

(b)	Revaluation A/c	Dr.		10,000
	To Stock A/c				10,000
	(Being Decrease in Stock transferred to Revaluation Account)

(c)	Revaluation A/c	Dr.		5,000
	To Machinery A/c				5,000
	(Being Decrease in value of machinery transferred to Revaluation Account)

(d)	Revaluation A/c	Dr.		2,000
	To Provision for Doubtful Debts A/c				2,000
	(Being Increase in liabilities to Revaluation Account)

(e)	Investments A/c	Dr.		10,000
	To Revaluation A/c				10,000
	(Being Increase in value transferred to Revaluation Account)

(f)	Bills Payable A/c	Dr.		1,000
	To Revaluation A/c				1,000
	(Being Decrease in liabilities transferred to Revaluation Account)

(g)	Revaluation A/c	Dr.		6,000
	To X’s Capital A/c				3,000
	To Y’s Capital A/c				1,800
	To Z’s Capital A/c				1,200
	(Being Revaluation profit transferred to Partners’ Capital Accounts)

Question 25: (Leena, Madan, and Naresh)

Leena, Madan and Naresh were partners, sharing profits and losses in the ratio of 2 : 2 : 1. Madan decides to retire on 31st March, 2024. On the date of his retirement, some of the assets and liabilities appeared in the books as follows:
Creditors ₹ 70,000; Building ₹ 1,00,000; Plant and Machinery ₹ 40,000; Stock of Raw Materials ₹ 20,000; Stock of Finished Goods ₹ 30,000 and Debtors ₹ 20,000.
Following was agreed among the partners on B’s retirement:
(a) Building to be appreciated by 20%.
(b) Plant and Machinery to be reduced by 10%.
(c) A Provision of 5% on Debtors to be created for Doubtful Debts.
(d) Stock of Raw Materials to be valued at ₹ 18,000 and Finished Goods at ₹ 35,000.
(e) An Old Computer previously written off was sold for ₹ 2,000 as scrap.
(f) Firm had to pay ₹ 5,000 to an injured employee.
Pass necessary Journal entries to record the above adjustments and prepare the Revaluation Account.

Answer:

Revaluation Account
Dr.					Cr.
Particulars		(₹)	Particulars	(₹)
Plant and Machinery (40,000 × 10%)		4,000	Building (1,00,000 × 20%)	20,000
Provision for Doubtful Debts		1,000	Stock of Finished Goods	5,000
Stock of Raw Materials		2,000	Computer	2,000
Workmen’s Compensation Claim		5,000
Profit transferred to:
Leena’s Capital A/c	6,000
Madan’s Capital A/c	6,000
Naresh’s Capital A/c	3,000	15,000
		27,000		27,000

Journal
Particulars		L.F.	Debit(₹)	Credit(₹)
Building A/c	Dr.		20,000
Stock of Finished Good A/c	Dr.		5,000
Computer A/c	Dr.		2,000
To Revaluation A/c				27,000
(Being Increase in value Assets transferred to Revaluation Account)

Revaluation A/c	Dr.		12,000
To Plant and Machinery A/c				4,000
To Provision for Doubtful Debts A/c				1,000
To Stock of Raw Material A/c				2,000
To Workmen’s Compensation Claim A/c				5,000
((Being Decrease in value of Assets and increase in Liabilities transferred to Revaluation Account)

Revaluation A/c	Dr.		15,000
To Leena’s Capital A/c				6,000
To Madan’s Capital A/c				6,000
To Naresh’s Capital A/c				3,000
((Being Revalution Profit transferred to Partners’ Capital accounts)

Question 26: (Punit, Ramit, and Akshit)

Punit, Ramit and Akshit were partners sharing profits equally. Akshit retired on 1st April, 2024. Punit and Ramit decided to continue the business and share profits in the ratio of 3: 2. They also decided to give effect to the change in values of assets and liabilities without changing their book values.

The book values and their revised values were as follows:

	Book Values (₹)	Revised Values (₹)
Land	5,50,000	8,50,000
Building	2,50,000	2,10,000
Computers	1,00,000	70,000
Computer Softwares	5,00,000	4,00,000
Sundry Creditors	70,000	60,000
Workmen Compensation Claim		5,000

Pass an adjustment entry.

Answer:

	Punit		Ramit		Akshit
Old Ratio	1	:	1	:	1
New Ratio	3	:	2	:	Retired

Punit = 1/3-3/5=5-9/15= -4/15 (Gain)

Ramit = 1/3-2/5=5-6/15= -1/15 (Gain)

Akshat = 1/3-0/5=5-0/15= 5/15 =1/3 (Sacrifice)

SHARE OF SACRIFICE FOR AKSHAT, RETIRING PARNTER

Sacrificing ratio of Akshat is 1/3

Compensating amount =1,35,,000×1/3=45,000

Share of Compensating amount by Punit and Ramit in sacrificing ratio (4:1)

Punit= 45,000×4/5=36,000

Ramit= 45,000×1/5=9,000

An adjustment entry

Particulars	Dr. ₹	Cr. ₹
Punit’s Capital A/c Dr.Ronit’s Capital A/c Dr. To Akshat’s Capital A/c	36,0009,000	45,000

Question 27: (X, Y, and Z)

X, Y and Z are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Z retires from the firm on 31st March, 2025. On the date of Z’s retirement, the following balances appeared in the books of the firm:
General Reserve ₹ 1,80,000
Profit and Loss Account (Dr.) ₹ 30,000
Workmen Compensation Reserve ₹ 24,000 which was no more required
Employees’ Provident Fund ₹ 20,000.
Pass necessary Journal entries for the adjustment of these items on Z‘s retirement.

Answer:

Journal
Date	Particulars		L.F.	Debit(₹)	Credit(₹)
2025 Mar.31	General Reserve A/c	Dr.		1,80,000
	Workmen Compensation Reserve A/c	Dr.		24,000
	To X’s Capital A/c				1,02,000
	To Y’s Capital A/c				68,000
	To Z’s Capital A/c				34,000
	((Being Accumulated profits distributed among partners in old ratio)

	X’s Capital A/c	Dr.		15,000
	Y’s Capital A/c	Dr.		10,000
	Z’s Capital A/c	Dr.		5,000
	To Profit and Loss A/c				30,000
	((Being Debit balance in Profit and Loss A/c distributed among partners in old ratio)

Working Notes:

WN1: Calculation of Share in Credit Balance of Reserves

Total Credit Balance of Reserves

= General Reserve + WCF= 1,80,000 + 24,000 = 2,04,000

X‘s share= 2,04,000××3/6 =1,02,000

Y‘s share= 2,04,000××2/6 =68,000

Z‘s share= 2,04,000××1/6 =34,000

WN2: Calculation of Share in Debit Balance of Profit and Loss A/c

X‘s share= 30,000××3/6 =15,000

Y‘s share= 30,000××2/6 =10,000

Z‘s share= 30,000××1/6 =5,000

Note: Employees’ Provident Fund will not be distributed as it is a liability and not accumulated profit.

Question 28: (Asha, Naveen, and Shalini)

Asha, Naveen and Shalini were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Goodwill appeared in their books at a value of ₹ 80,000 and General Reserve at ₹ 40,000. Naveen decided to retire from the firm. On the date of his retirement, goodwill of the firm was valued at ₹ 1,20,000. The new profit-sharing ratio decided among Asha and Shalini is 2 : 3.
Record necessary Journal entries on Naveen’s retirement.

Answer:

Journal
Date	Particulars		L.F.	Debit (₹)	Credit (₹)
	Asha’s Capital A/c	Dr.		40,000
	Naveen’s Capital A/c	Dr.		24,000
	Shalini’s Capital A/c	Dr.		16,000
	To Goodwill A/c				80,000
	(Being Existing goodwill written off amongst existing partners in old ratio)

	General Reserves A/c	Dr.		40,000
	To Asha’s Capital A/c				20,000
	To Naveen’s Capital A/c				12,000
	To Shalini’s Capital A/c				8,000
	(Being General Reserves distributed among all partners in old ratio)

	Shalini’s Capital A/c	Dr.		48,000
	To Asha’s Capital A/c				12,000
	To Naveen’s Capital A/c				36,000
	(Being Goodwill adjusted by debiting gaining partner and crediting sacrificing partner and retiring partner)

Calculation of Gaining Ratio:

Gain of a Partner=New Share – Old Shares

Asha’s Gain (Sacrifice): 2/5-5/10=4-5/10=(-)1/10

Shalini’s Gain (Sacrifice): 3/5-2/10=6-2/10=4/10

Therefore, Both Asha and Naveen would be compensated by Shalini in the ratio of 1:3

Asha’s Sacrifice for 1/10th Share=1,20,000×1/10=12,000

Naveen’s Sacrifice for 3/10th Share= 1,20,000×3/10=36,000

Question 29: (X, Y, and Z)

X, Y and Z were equal partners in a firm. On 31st March, 2025, their Balance Sheet was as follows:

Liabilities	₹	Assets	₹
Creditors	77,000	Bank	47,000
General Reserve	26,000	Debtors	23,000
Workmen Compensation Reserve	32,000	Stock	1,10,000
Capital A/cs:		Investments	17,000
X 60,000		Furniture	10,000
Y 40,000		Machinery	35,000
N 20,000	1,20,000	Profit & Loss A/c	11,000
		Advertisement Suspense A/c	2,000
	2,55,000		2,55,000

On the above date, Z retires from the firm and X and Y decided to share future profits in the ratio of 3 :2 Partners decide to show accumulated profits, losses and reserves in the Balance Sheet of the reconstituted firm at their original values.

Pass an ‘Adjustment Entry’ for the treatment of accumulated profits, losses and reserves.

Answer:

Date	Particulars		Dr. (₹)	Cr. (₹)
	X’s Capital A/c	Dr.	12,000
	Y’s Capital A/c	Dr.	3,000
	ToZ’s Capital A/c			15,000
	(Being accumulated profits, losses and reserve adjusted)

Working Note:

Net effect of accumulated profits, losses and reserve

General Reserve	26,000
Workmen Compensation Reserve	32,000
	58,000
Less:
Profit & Loss A/c	11,000
Advertisement Suspense	2,000
	45,000

Note; Above amount is to be adjusted in Gaining sacrificing ratio

X =	45,000	×	4/15	=	12,000
Y =	45,000	×	1/15	=	3,000
Z =	45,000	×	5/15	=	15,000

Gaining sacrificing ratio

	Old Ratio	–	New ratio	=	(-) Gain/(+) Sacrifice
X =	1/3	–	3/5	=	5-9/15	=	-4/15
Y =	1/3	–	2/5	=	5-6/15	=	-1/15
Z =	1/3	–	0/5	=	5-0/15	=	5/15

Question 30: (Partnership deed of C and D)

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−
(a) 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, 2024 to retire on 30th September, 2024, 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: 2022 −₹ 2,800; 2023 − ₹ 2,200 and 2024 − ₹ 1,600. What amount is due to C as per the partnership agreement?

Answer:

C’s Capital Account
Dr.			Cr.
Particulars	₹	Particulars		₹
C’s Loan A/c	7,700	Balance b/d		6,000
		C’s Current A/c		1,700
	7,700			7,700

C’s Current Account
Dr.				Cr.
Particulars	₹	Particulars	₹
Balance b/d	500	Profit and Loss Suspense A/c (Share of profit) (WN 1)	550
C’s Capital A/c (balancing figure)	1,700	D’s Current A/c (Share of goodwill) (WN 2)	1,650
	2,200		2,200

Working Notes:

WN 1: Calculation of Profit (from April 01, 2024 to Sept. 30, 2024)

Average profit = total profit of past given years/number of years

Average profit =2,800+2,200+1,600/3=2,200

C’s share of profit (for last 6 month)=Average profit×C’s share×6/12

=2,200×1/2×6/12=550

WN 2: Calculation of Goodwill

Goodwill = Average Profit × 1.5
= 2,200 × 1.5 = ₹ 3,300
C’s Share of Goodwill =3,300×1/2=1650