In this article, I have provided Q11 to 20 Retirement of a Partner TS Grewal Solutions 2025-26. You can find the solutions of specifically Q11 to Q20 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 11: (P, Q, and R)
P, Q and R are partners sharing profits in the ratio of 7:5:3. P retires and it is decided that profit-sharing ratio between Q and R will be same as existing between P and Q. Calculate New profit-sharing ratio and Gaining Ratio.
Answer:
Calculation of Gaining Ratio
P :Q :R=7:5:3(Old ratio)
Q :R=7:5 (New ratio, same as between P & Q)
Gaining Ratio = New Ratio – Old Ratio
Q’s Gain=7/12−5/15=35−20/60=15/60
R’s Gain=5/12−3/15=25−12/60=13/60
Q:R=15:13
Treatment of Goodwill
Question 12: (Sunil, Shahid, and David)
Sunil, Shahid and David are partners sharing profits and losses in the ratio of 4:3:2.Shahid retires and the goodwill is valued at ₹72,000. Calculate Shahid’s share of goodwill and pass the Journal entry for Goodwill.
Sunil and David decided to share future profits and losses in the ratio of 5:3.
Answer:
| Journal | |||||
| Date | Particulars | L.F. | Debit(₹) | Credit(₹) | |
| Shahid’s capital a/c | Dr. | 24,000 | |||
| To Sunil’s capital a/c | 13,000 | ||||
| To David’s capital a/c | 11,000 | ||||
| (Being Goodwill adjusted) | |||||
Working notes;
WN1-
Calculation of gaining and sacrificing ratio
| Sunil | Shahid | David | |
| Old ratio | 4 : | 3 : | 2 |
| New ratio | 5 | : | 3 |
Sunil=4/9-5/8=32-45/72= -13/72
David= 2/9-3/8=16-27/72=-11/72
Gaining ratio of Sunil and David=13:11
WN2-
Firms goodwill =72,000
Share of retiring partner Shahid is 3/9
Share of shahid share =72,000×3/9=24,000
WN3-
Sunil and David will compensate 24,000 in their gaining ratio 13:11
Sunil will compensate=24,000×13/24=13,000
David will compensate=24,000×11/24=11,000
Question 13: (P, Q, R, and S)
P, Q, R and S were partners in a firm sharing profits in the ratio of 5 : 3 : 1 : 1. On 1st January, 2024, S retired from the firm. On S’s retirement, goodwill of the firm was valued at ₹4,20,000. New profit-sharing ratio among P, Q and R will be 4 : 3 : 3.
Showing your working notes clearly, pass necessary Journal entry for the treatment of goodwill in the books of the firm on S’s retirement.
Answer:
| Journal | |||||
| Date | Particulars | L.F. | Debit(₹) | Credit(₹) | |
| 2024 Jan.1 | R’s Capital A/c | Dr. | 84,000 | ||
| To P’s Capital A/c | 42,000 | ||||
| To S’s Capital A/c | 42,000 | ||||
| (Being Goodwill adjusted) | |||||
Working Notes:
Gaining Ratio = New Ratio – Old Ratio
P=4/10−5/10=−1/10sacrifice
Q=3/10−3/10=0
R=3/10−1/10=2/10
P’s share=4,20,000×1/10=42,000
R’s share=4,20,000×2/10=84,000
S’s share=4,20,000×1/10=42,000
Question 14: (Aparna, Manisha, and Sonia)
Aparna, Manisha and Sonia are partners sharing profits in the ratio of 3 : 2 : 1. Manisha retired and goodwill of the firm is valued at ₹ 1,80,000. Aparna and Sonia decided to share future profits in the ratio of 3 : 2. Pass necessary Journal entries.
Answer:
| Journal | ||||||
| Date | Particulars | L.F. | (₹) | (₹) | ||
| Aparna’s Capitals A/c | Dr. | 18,000 | ||||
| Sonia’s Capital A/c | Dr. | 42,000 | ||||
| To Manisha’s Capital A/c | 60,000 | |||||
| (Being Manisha’s share of goodwill adjusted to Aparna’s and Sonia’s Capital Account in their gaining ratio) | ||||||
Working Notes:
WN1: Calculation of Manisha’s Share in Goodwill
Manisha’s share=Firm’s Goodwill×Manisha’s Profit ShareManisha’s share=1,80,000×13=60,000
WN2: Calculation of Gaining Ratio
Gaining Ratio = New Ratio − Old Ratio
Aparna’s gain=3/5−3/6=3/30
Sonia’s gain=2/5−1/6=7/30
Gaining Ratio=3:7
Aparna’s share=60,000×3/10=18,000
Sonia’s share=60,000×7/10=42,000
Question 15: (A, B, and C)
A, B and C are partners sharing profits in the ratio of 3 : 2 : 1. B retired and the new profit-sharing ratio between A and C was 2 : 1. On B‘s retirement, the goodwill of the firm was valued at ₹ 90,000. Pass necessary Journal entry for the treatment of goodwill on B‘s retirement.
Answer:
| Journal | ||||
| Particulars | L.F. | Debit(₹) | Credit(₹) | |
| A’s Capital A/c | Dr. | 15,000 | ||
| C’s Capital A/c | Dr. | 15,000 | ||
| To B’s Capital A/s | 30,000 | |||
| (Being Adjustment B’s share of goodwill made) | ||||
Working Notes:
WN 1: Calculation of Gaining Ratio
Old Ratio (A, B and C) = 3 : 2 : 1
B retires from the firm.
New Ratio (A and C) = 2 : 1
Gaining Ratio=New Ratio − Old Ratio
A‘s share=2/3 -3/6 =4-3/6=1/6
B‘s share= 1/3 -1/6 =2-1/6=1/6
Gaining Ratio = 1 : 1
WN 2: Adjustment of Goodwill
Goodwill of the firm = ₹ 90,000
B’s share of goodwill =90,000×2/3=30,000
This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 1 : 1).
A’s and C’s capital will be debited =30,000×1/2=15000
Question 16: (Aman, Bimal, and Deepak)
Aman, Bimal and Deepak are partners sharing profits in the ratio of 2: 3: 5. The goodwill of the firm has been valued at ₹37,500. Aman retired. Bimal and Deepak decided to share profits equally in future.
Calculate gain/sacrifice of Bimal and Deepak on Aman’s retirement and also pass necessary Journal entry for the treatment of goodwill. (CBSE 2019)
Answer:
| Journal | |||||
| Date | Particulars | L.F. | Debit(₹) | Credit(₹) | |
| Bimal’s capital a/c | Dr. | 7,500 | |||
| To Amal’s capital a/c | 7,500 | ||||
| (Being Goodwill adjusted) | |||||
Working notes;
WN1-
Calculation of gaining and sacrificing ratio
| Amal | Bimal | Deepak | |
| Old ratio | 2 : | 3 : | 5 |
| New ratio | Retires | 1 : | 1 |
Bimal = 3/10-1/2=3-5/10= -2/10
Deepak =5/10-1/2=5-5/10= 0/10
Gaining ratio of Sunil and David=13:11
WN2-
Firms goodwill =37,500
Share of retiring partner Amal is 2/10
Share of Amal share =37,500×2/10=7,500
Bimal will compensate 7,500
Question 17: (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 18: (A, B, C, and D)
A, B, C and D are partners sharing profits in the ratio of 3:3:2:2 respectively. D retires and A, B and C decide to share future profits in the ratio of 3:2:1. Goodwill of the firm is valued at ₹6,00,000. Goodwill existed in the books at ₹4,50,000. Profits for the first year after D’s retirement was ₹12,00,000. Give the necessary Journal entries to record Goodwill and to distribute the profits. Show your calculations.
Answer:
| Date | Particulars | L.F. | (Dr.) ₹ | (Cr.) ₹ | |
| 1. | A’s Capital A/c | Dr. | 1,35,000 | ||
| B’s Capital A/c | Dr. | 1,35,000 | |||
| C’s Capital A/c | Dr. | 90,000 | |||
| D’s Capital A/c | Dr. | 90,000 | |||
| To Goodwill A/c | 4,50,000 | ||||
| (Being old Goodwill written off) | |||||
| 2. | A’s Capital A/c | Dr. | 1,20,000 | ||
| B’s Capital A/c | Dr. | 20,000 | |||
| To C’s Capital A/c | 20,000 | ||||
| To D’s Capital A/c | 1,20,000 | ||||
| (Being sacrificing partners compensated) | |||||
| 3. | Profit and Loss Appropriation A/c | Dr. | 12,00,000 | ||
| To A’s Capital A/c | 6,00,000 | ||||
| To B’s Capital A/c | 4,00,000 | ||||
| To C’s Capital A/c | 2,00,000 | ||||
| (Being profit distributed in 3:2:1) |
Working notes:
WN 1: Calculation Gaining and Sacrificing Ratio
Old Ratio (before retirement):
A : B : C : D = 3 : 3 : 2 : 2
Total parts = 3 + 3 + 2 + 2 = 10
A = 3/10
B = 3/10
C = 2/10
D = 2/10
New Ratio (after D retires):
A : B : C = 3 : 2 : 1
Total parts = 3 + 2 + 1 = 6
A = 3/6 = 1/2
B = 2/6 = 1/3
C = 1/6
Calculation Gaining/Sacrificing Ratio:
| A | = | 3/10 | – | 3/6 | = | 9-15/30 | = | -6/30 | Gain |
| B | = | 3/10 | – | 2/6 | = | 9-10/30 | = | -1/30 | Gain |
| C | = | 2/10 | – | 1/6 | = | 6-5/30 | = | 1/30 | Sacrifice |
| D | = | 2/10 | – | 0/6 | = | 6-0/30 | = | 6/30 | Sacrifice |
WN 2: Calculation share of Goodwill of Each partner
| A | = | 6,00,000 | × | -6/30 | = | 1,20,000 | Debit |
| B | = | 6,00,000 | × | -1/30 | = | 20,000 | Debit |
| C | = | 6,00,000 | × | 1/30 | = | 20,000 | Credit |
| D | = | 6,00,000 | × | 6/30 | = | 1,20,000 | Credit |
WN 3: Calculation share of old Goodwill to be written off
| A | = | 4,50,000 | × | 3/10 | = | 1,35,000 |
| B | = | 4,50,000 | × | 3/10 | = | 1,35,000 |
| C | = | 4,50,000 | × | 2/10 | = | 90,000 |
| D | = | 4,50,000 | × | 2/10 | = | 90,000 |
WN 4: Calculation share of profit distributed
| A | = | 12,00,000 | × | 3/6 | = | 6,00,000 |
| B | = | 12,00,000 | × | 2/6 | = | 4,00,000 |
| C | = | 12,00,000 | × | 1/6 | = | 2,00,000 |
Question 19: (A, B, and C)
A, B and C are partners sharing profits in the ratio of 4/9 : 3/9 : 2/9. B retires and his capital after making adjustments for reserves and gain (profit) on revaluation stands at ₹ 1,39,200. A and C agreed to pay him ₹ 1,50,000 in full settlement of his claim. Record necessary Journal entry for adjustment of goodwill if the new profit-sharing ratio is decided at 5 : 3
Answer:
| Journal | ||||||
| Date | Particulars | L.F. | Debit₹ | Credit₹ | ||
| A’s Capital A/c | Dr. | 5,850 | ||||
| C’s Capital A/c | Dr. | 4,950 | ||||
| To B’s Capital A/c | 10,800 | |||||
| (Being Adjustment of B’s share of goodwill) | ||||||
Working Notes
i) Calculation of B’s share of goodwill
A, B and C are sharing profits in ratio 4/9 : 3/9 : 2/9
B retires from the firm. Remaining partners agreed to pay him ₹ 1,50,000
B’s capital after making necessary adjustments ₹ 1,39,200
Therefore, Hidden Goodwill is ₹ (1,50,000 – 1,39,200) i.e. ₹ 10,800
ii) Gaining Ratio
New profit sharing ratio between A and B is 5:3
A’s Gain=5/8-5/9=13/72
C’s Gain=3/8-2/9=11/72
Gaining ratio 13:11
Thus, B’s share of goodwill will be brought in by A and C in the gaining ratio 13:11 i.e.
A’s capital will be debited =10,800×13/24=5850
C’s capital will be debited =10,800×11/24=4950
Question 20: (Shivam, Kapil, and Deepak)
Shivam, Kapil and Deepak are partners sharing profits in the ratio of 3:1:2. On 31st March, 2024, Kapil retired and his capital account after adjustments of reserve and profit on revaluation was ₹3,50,000. Shivam and Deepak paid him ₹4,20,000 in settlement of his claim. To settle his account, a computer of ₹4,20,000 was given to Kapil. Pass the necessary Journal entries in the books of the firm.
Answer:
| Date | Particulars | ₹ | ₹ | |
| 1. | Shivam’s Capital A/c | Dr. | 42,000 | |
| Deepak’s Capital A/c | Dr. | 28,000 | ||
| To Kapil’s Capital A/c | 70,000 | |||
| (Kapil was compensated for his share of goodwill ) | ||||
| 2. | Kapil’s Capital A/c | Dr. | 4,20,000 | |
| To Computer A/c | 4,20,000 | |||
| (Computer was paid in consideration of Capital) |
Working notes:
| Kapil’s capital(after adjustments of reserve and profit on revaluation) | = | ₹3,50,000 |
| Less: Shivam and Deepak paid him capital in settlement of his claim | = | ₹4,20,000 |
| Hidden Goodwill (Share of Kapil in Goodwill) | = | ₹ 70,000 |
Shivam and Deepak Pay in 3:2
Shivam = 70,000 × 3/5= 42,000
Deepak = 70,000 × 2/5= 28,000
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