Q51 to 60 Retirement of a Partner TS Grewal Solutions 2025-26

Q51 to 60 Retirement of a Partner TS Grewal Solutions 2025-26
Q51 to 60 Retirement of a Partner TS Grewal Solutions 2025-26

In this article, I have provided Q51 to 60 Retirement of a Partner TS Grewal Solutions 2025-26. You can find the solutions of specifically Q51 to Q60 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 51: (X, Y, and Z)

Balance Sheet of XY and Z who shared profits in the ratio of 5 : 3 : 2, as on 31st March, 2025 was as follows:

 Balance Sheet as at 31st March, 2025 
LiabilitiesAssets
Sundry Creditors39,750Bank (Minimum Balance)15,000
Employees’ Provident Fund5,250Debtors97,500
Workmen Compensation Reserve22,500Stock82,500
Capital A/cs: Fixed Assets1,87,500
X 1,65,000   
Y84,000   
Z66,0003,15,000  
 3,82,500 3,82,500

Y retired on 1st April, 2025 and it was agreed that:
(i) Goodwill of the firm is valued at ₹ 1,12,500 and Y’s share of it be adjusted into the accounts of X and Z who are going to share future profits in the ratio of 3 : 2.
(ii) Fixed Assets be appreciated by 20%.
(iii) Stock be reduced to ₹ 75,000.
(iv) Y be paid amount brought in by X and so as to make their capitals proportionate to their new profit-sharing ratio.
Prepare Revaluation Account, Capital Accounts of all partners and the Balance Sheet of the New Firm.

Answer:

Revaluation Account
Dr. Cr.
Particulars()Particulars()
Stock7,500Fixed Assets37,500
Revaluation Profit   
X’s Capital A/c15,000   
Y’s Capital A/c9,000   
Z’s Capital A/c6,00030,000  
    
 37,500 37,500
Partners’ Capital Accounts
Dr.Cr.
ParticularsXYZParticularsXYZ
Y’s Capital A/c11,25022,500Balance b/d1,65,00084,00066,000
Bank1,33,500General Reserve11,2506,7504500
Balance c/d2,20,5001,47,000Revaluation (Profit)15,0009,0006,000
    X’s Capital A/c11,250
    Z’s Capital A/c22,500
    Bank A/c40,50093,000
 2,31,7501,33,5001,69,500 2,31,7501,33,5001,69,500
Balance Sheet as on March 31, 2025
Liabilities()Assets()
Sundry Creditors39,750Bank15,000
Employees Provident Fund5,250Debtors97,500
Capitals: Stock75,000
 X2,20,500 Fixed Assets2,25,000
 Z1,47,00072,000  
 4,12,500 4,12,500

Working Notes:
New Capital = 1,80,000 + 54,000 + 1,33,500 = ₹ 3,67,500

X’s New Capital=3,67,500×3/5=2,20,500

Z’s New Capital=3,67,500×2/5=1,47,500

X brings in ₹ 40,500 (2,20,500 – 1,80,000)

Z brings in ₹₹ 93,000 (1,47,500 – 54,000)

Question 52: (Sushil, Satish, and Samir)

Sushil, Satish and Samir are partners sharing profits in the ratio of 5 : 3 : 2. Satish retires on 1st April, 2025 from the firm, on which date capitals of Sushil, Satishand Samir after all adjustments are ₹ 1,03,680, ₹ 87,840 and ₹ 26,880 respectively. The Cash and Bank Balance on that date was ₹ 9,600.Satish is to be paid through amount brought in by Sushiland Samir in such a way as to make their capitals proportionate to their new profit-sharing ratio which will be Sushil 3/5 and Samir2/5. Calculate the amount to be paid or to be brought in by the continuing partners assuming that a minimum Cash and Bank balance of ₹ 7,200 was to be maintained and pass the necessary Journal entries.

Answer:

Total capital of firm before retirement = 1,03,680+87,840+26,880 = ₹ 2,18,400

Availability of cash = 9,600-7,200 (Minimum Balance) = ₹ 2,400

Combined new capital of Sushiland Samir =₹ 2,16,000

Sushil’s new capital = 2,16,000×3/5=₹ 1,29,600

Existing capital of Sushil= ₹ 1,03,680

So, Sushil has to bring = 1,29,600−1,03,680= ₹ 25,920

Samir’s new capital = 2,16,000×2/5=₹ 86,400

Existing capital of Samir = ₹ 26,880

So, Samir has to bring = 86,400−26,880=₹ 59,520  

Question 53: (Meghna, Mehak, and Mandeep)

Meghna, Mehak and Mandeep were partners in a firm whose Balance Sheet as on 31st March, 2023 was as under:

BALANCE SHEET
LiabilitiesAssets
Creditors 28,000Cash27,000
General Reserve 7,500Debtors20,000
Capitals:  Stock28,000
Meghna20,000 Furniture5,000
Mehak14,500   
Mandeep10,00044,500  
  80,000 80,000

Mehak retired on this date under following terms:

(i) To reduce stock and furniture by 5% and 10% respectively.

(ii) To provide for doubtful debts at 10% on debtors.

(ii) Goodwill was valued at ₹12,000.

(iv) Creditors of ₹8,000 were settled at ₹7,100.

(V) Mehak should be paid off and the entire sum payable to Mehak shall be brought in by Meghna and Mandeep in such a way that their capitals should be in their new profit sharing ratio and a balance of ₹25,000 is maintained in the Cash Account.

Prepare Revaluation Account and Partners’ Capital Accounts of the new firm.

(CBSE Sample Question Paper 2025)

Answer:

 Revaluation Account 
ParticularsParticulars 
To Stock A/c1,400By Creditors 900
To Funiture A/c500Loss transferred to  
To Prov. For doubtful debts2,000Meghna’s Capital A/c1,000 
  Mehak’s Capital A/c1,000 
  Mandeep’s Capital A/c1,0003,000
     
 3,900  3,900
Partners’ Capital Accounts
ParticularsMeghna (₹)Mehak (₹)Mandeep (₹)ParticularsMeghna (₹)Mehak (₹)Mandeep (₹)
To Revaluation A/c (Loss)1,0001,0001,000By Balance b/d20,00014,50010,000
To Mehak’s Capital A/c (Goodwill)2,0002,000By General Reserve2,5002,5002,500
To Cash A/c (Bal. fig. for Mehak)20,000By Meghna (Goodwill to Mehak)2,000
To Balance c/d27,05027,050By Mandeep (Goodwill to Mehak)2,000
    By Cash A/c (Balancing figure)7,55017,550
 33,35026,25033,350 33,35026,25033,350

Working notes:

WN 1: Calculation of Mehak’s share of Goodwill

Sacrificing ratio of Mahak 1/3

Mahak’s Share of Goodwill = 12,000×1/3 = 4,000

Mahak’s Share of Goodwill will be shared by Meghna and Mandeep in 1:1

Meghna and Mandeep will compensate = 4,000×1/2=2,000

Following Entry be passed:

DateParticulars L.F.(Dr.)  ₹(Cr.)  ₹
 Meghna’s Capital A/cDr. 2,000 
 Mandeep’s Capital A/cDr. 2,000 
 To Mehak’s Capital A/c   4,000
 (Being sacrificing partner compensated)    

WN 2: Calculation of total capital of the firm after Mehak’s Retirement

Balance of capital after all adjustment 
Meghna’s capital19,500
Mandeep’s Capital9,500
 29,000
Shortage of cash to be brought in by Meghna and Mandeep in order to make payment to Mehak25,100
Capital of a new firm54,100

Capital of Each partner after retirement= 54,100×1/2 = 27,050

Shortage of Cash = Amount payable to Mehak – Existing Cash and Bank Balance + Minimum cash and bank balance required

Shortage of Cash = 20,000 – (27,000-7,100) + 25,000

Shortage of Cash = 25,100

 MeghnaMandeep
New Capital (54,100 in the ratio 1:1)27,05027,050
Existing Capital19,5009,500
Amount shall be brought in by Meghna and Mandeep7,55017,550

Question 54: (Suraj, Pawan, and Kamal)

Suraj, Pawan and Kamal are partners in a firm sharing profits and losses in the ratio of 3:2:1. Their Balance

Sheet as at 31st March, 2024 is:

LiabilitiesAssets
Creditors46,000Cash in Hand18,000
General Reserve12,000Debtors              25,000 
Capital A/cs: Less: Provision for Doubtful Debts 3,00022,000
Suraj 40,000 Stock18,000
Pawan 40,000 Furniture30,000
Kamal 30,0001,10,000Machinery70,000
  Goodwill10,000
    
 1,68,000 1,68,000

Pawan retired on 1st April, 2024 on the following terms:

(a) Provision for Doubtful Debts be raised by 1,000.

(b) Stock to be reduced by 10% and Furniture by 5%.

(c) There is an outstanding claim of damages of 1,100 and it is to be provided for.

(d) Creditors will be written back by 6,000.

(e) Goodwill of the firm is valued at ₹ 22,000.

(f) Pawan is paid in full with the cash brought in by Suraj and Kamal in such a manner that their capitals are in proportion to their profit-sharing ratio and Cash in Hand remains at 10,000.

Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of Suraj and Kamal.

Answer:

Revaluation A/c
ParticularsParticulars
Provision for Doubtful Debts1,000Creditors6,000
Stock1,800  
Furniture1,500  
outstanding claim of damages1,100  
Capital A/cs:   
Suraj – 300   
Pawan- 200    
Kamal- 100600  
 6,000 6,000
Capital A/c
ParticularsSurajPawanKamalParticularsSurajPawanKamal
To Goodwill A/c5,0003,3331,667By Balance B/d3,00,0002,00,0002,00,000
To Pawan ‘s Capital A/c5,5001,833By Revaluation A/c300200100
    By General Reserve6,0004,0002,000
To Balance C/d35,80048,20028,600By Suraj ‘s Capital A/c5,500
    By Kamal ‘s Capital A/c1,833
 46,30051,53332,100 46,30051,53332,100
To Cash A/c48,2002,450By Balance B/d35,80048,20028,600
To Balance C/d78,45026,150By Cash A/c42,650
        
 78,45048,20028,600 78,45048,20028,600
Balance sheet of new firm
LiabilitiesAssets
Creditors40,000Cash in Hand10,000
outstanding claim of damages1,100Debtors              25,000 
Capital A/cs: Less: Provision for Doubtful Debts 4,00021,000
Suraj 78,450 Stock (18,000-1,800)16,200
Kamal 26,1501,04,600Furniture (30,000-1,500)28,500
  Machinery70,000
    
 1,45,700 1,45,700

Question 55: (Asha, Deepa, and Leta)

The Balance Sheet of Asha, Deepa and Leta who were sharing profits in the ratio of 5 : 3 : 2 as at 31st March, 2025 is as follows:

 
LiabilitiesAssets
Creditors50,000Cash at Bank40,000
Employees’ Provident Fund10,000Sundry Debtors1,00,000
Profit and Loss A/c85,000Stock80,000
Capital A/cs: Fixed Assets60,000
Asha40,000   
Deepa62,000   
Leta33,0001,35,000  
 2,80,000 2,80,000
    

Asha retired on 1st April, 2025 and Deepa and Leta decided to share profits in future in the ratio of 3 : 2 respectively.
The other terms on retirement were:
(a) Goodwill of the firm is to be valued at ₹ 80,000.
(b) Fixed Assets are to be depreciated to ₹ 57,500.
(c) Make a Provision for Doubtful Debts at 5% on Debtors.
(d) A liability for claim, included in Creditors for ₹ 10,000, is settled at ₹ 8,000.
The amount to be paid to Asha by Deepa and Letain such a way that their Capitals are proportionate to their profit-sharing ratio and leave a balance of ₹ 15,000 in the Bank Account.
Prepare Profit and Loss Adjustment Account and Partners’ Capital Accounts.

Answer:

Revaluation Account
Dr.Cr.
Particulars(₹)Particulars(₹)
Fixed Assets A/c(60,000 – 57,500)2,500Creditors (10,000 – 8,000)2,000
Provision for Doubtful Debts5,000Loss on Revaluation transferred to: 
  Asha’s Capital a/c2,750 
  Deepa’s Capital a/c1,650 
  Leta’s Capital a/c1,1005,500
 7,500 7,500
    
Partners’ Capital Accounts
Dr.Cr.
ParticularsAshaDeepaLetaParticularsAshaDeepaLeta 
Revaluation A/c (Loss)2,7501,6501,100Balance b/d40,00062,00033,000 
Asha’s Capital A/c24,00016,000Profit & Loss A/c42,50025,50017,000 
Balance c/d1,19,75061,85032,900Deepa’s Capital A/c24,000 
    Leta’s Capital A/c16,000 
 1,22,50087,50050,000 1,22,50087,50050,000 
Bank A/c1,19,750Balance b/d1,19,75061,85032,900 
Balance c/d1,18,50079,000Bank A/c56,65046,100 
 1,19,7501,18,50079,000 1,19,7501,18,50079,000 
         

Working Notes

 WN 1: Calculation of Gaining Ratio 

Old Ratio (Asha, Deepa and Leta) = 5:3:2

New Ratio (Deepa and Leta) = 3:2

Gaining Ratio = New Ratio – Old Ratio

Deepa’s=3/5-3/10
 =3/10
Leta’s=2/5-2/10
 =2/10

Hence, gaining ratio is 3: 2.

WN2: Adjustment of Goodwill

Total Goodwill of the Firm = 80,000

Asha’s Share of Goodwill = 80,000×5/10=40,000

To be borne by Gaining partners in their Gaining Ratio i.e. 3:2
Deepa’s Share = 40,000×3/5=24,000
Leta’s Share = 40,000×2/5=16,000

WN3: Adjustment of Capital

Asha’s Capital before adjustment = 1,19,750

Deepa’s Capital before adjustment = 61,850

Leta’s Capital before adjustment = 32,900

Total Capital of New Firm= Asha’s Capital+Deepa’s Capital+Leta’s Capital+Closing balance of Bank Account-Available Bank Balance=1,19,750+61,850+32,900+15,000-32,000=₹1,97,500

New profit sharing ratio=3:2

Deepa’s Share of Goodwill =1,97,500×3/5=1,18,500

Leta’s Share of Goodwill =1,97,500×2/5=79,000
 

ParticularsDeepaLeta
 New Capital Balance1,18,50079,000
 Adjusted Old Capital Balance61,85032,900
Cash brought in by the Partner56,65046,100

WN4

Cash at Bank A/c
Dr.Cr.
Particulars(₹)Particulars(₹)
Balance b/d40,000Creditors8,000
Deepa’s Capital A/c56,650Asha’s Capital A/c1,19,750
Leta’s Capital A/c46,100Balance c/d15,000
 1,42,750 1,42,750

Question 56: (Amrit, Bhanu, and Chanu)

Amrit, Bhanu and Charu were partners in a firm sharing profits equally. Bhanu retired on 30th September, 202. Profit till the date of retirement was to be estimated based on last year’s profit. Profit for the year ended 31st March, 2024, was ₹ 3,60,000.

Calculate Bhanu’s share of profit till his retirement and pass Journal entry/entries for the same 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.

Answer:

DateParticulars 
(Case)Profit and Loss Suspense A/cDr.60,000 
1. To Bhanu’s Capital A/c  60,000
 (Bhanu was compensated for his share of goodwill ) (W.N. – 1)   
(Case)Amrit’s Capital A/cDr.48,000 
2.Charu’s Capital A/cDr.12,000 
 To Bhanu’s Capital A/c  60,000
 (Bhanu was compensated for his share of goodwill) (W.N. – 2)   

Working notes:

W.N. – 1 ((i) The profit-sharing ratio between Amrit and Charu does not change)

Profit sharing ratio of Amrit, Bhanu and Charu was 1:1:1

Profit for the year ended 31st March, 2021, was ₹ 3,60,000

Bhanu’s share of profit=3,60,000×1×6/3×12=60,000

W.N.-2 ((ii) The new profit-sharing ratio between Amrit and Charu changes to 3:2)

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

B=  1/3-2/5=5-6/15= -1/15 (Gain)

Share of A and B in 4:1

A=  60,000×4/5=48,000

A=  60,000×1/5=12,000

Question 57: (Amar, Bhuvi, and Charan)

Amar, Bhuvi and Charan were partners in a firm sharing profits equally. Bhuvi retired on 30th September, 2024. Profit or loss till the date of retirement was to be estimated based on last year’s profit. Loss for the year ended 31st March, 2024 was ₹1,80,000.

Calculate Bhuvi’s share of loss till her retirement and pass Journal entry / entries for the same 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.

Answer:

DateParticulars 
(Case)Bhuvi’sCapital A/cDr.60,000 
1. To Profit and Loss Suspense A/c A/c  60,000
 (Bhavi was compensated for his share of goodwill ) (W.N. – 1)   
(Case)Bhuvi’sCapital A/cDr.60,000 
2.To Amar’s Capital A/c  48,000
 To Charu’s Capital A/c  12,000
 (Bhavi was compensated for his share of goodwill) (W.N. – 2)   

Working notes:

Loss for the year ended 31st March, 2024 was ₹1,80,000.

W.N. – 1 ((i) The profit-sharing ratio between Amar and Charan does not change)

Profit sharing ratio of Amrit, Bhanu and Charu was 1:1:1

Loss for the year ended 31st March, 2021 was ₹1,80,000.

Bhavi’s share of profit = 1,80,000×1/3 = 60,000

W.N.-2 ((ii) The new profit-sharing ratio between Amar and Charan changes to 3: 2)

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

B=  1/3-2/5=5-6/15= -1/15 (Gain)

Share of A and B in 4:1

A=  60,000×4/5=48,000

B=  60,000×1/5=12,000

Question 58: (Yogesh, Naresh, and Pavesh)

Yogesh, Naresh and Pavesh were partners in a firm sharing profits in the ratio of 2: 2: 1. Naresh retired on 1st October, 2024. In terms of the Partnership Deed, financial statements were prepared as on date of retirement and profit was determined as ₹7,20,000.

(i) Pass the Journal entries for distribution of profit for the period.

(ii) Pass the Journal entries if loss of ₹3,60,000 was incurred.

Answer:

DateParticulars 
(Case)Profit & Loss AppropriationA/cDr.7,20,000 
1. To Yogesh’s Capital A/c  2,88,000
 To Naresh’s Capital A/c  2,88,000
 To Pavesh’s Capital A/c  1,44,000
 (Bhavi was compensated for his share of goodwill ) (W.N. – 1)   
(Case)Yogesh’s Capital A/cDr.1,44,000 
2.Naresh’s Capital A/cDr.1,44,000 
 Pavesh’s Capital A/cDr.72,000 
  To Profit & Loss AppropriationA/c  3,60,000
 (Bhavi was compensated for his share of goodwill) (W.N. – 2)   

Working Notes:

W.N. – 1 ((i) Pass the Journal entries for distribution of profit for the period.)

Profits sharing in the ratio of 2: 2: 1

Yogeshs = 7,20,000×2/5=2,88,000

Nareshs=  7,20,000×2/5=2,88,000

Pavesh=  7,20,000×1/5=1,44,000

W.N. – 2 ((ii) Pass the Journal entries if loss of ₹3,60,000 was incurred)

Profits sharing in the ratio of 2: 2: 1

Yogeshs = 3,60,000×2/5 = 1,44,000

Nareshs=  3,60,000×2/5 = 1,44,000

Pavesh=  3,60,000×1/5 = 72,000

Question 59: (Aman, Bharat, and Chetan)

The Partnership Deed of Aman, Bharat and Chetan has a clause that any partner may retire from the firm on the following terms by giving six months’ 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, if he retires in-between the year.

(c) His Share of Goodwill of the firm calculated on the basis of 1% times the average profit of the three preceding completed years.

(d) Assets shall be revalued and liabilities re-assessed. Retiring partner will get his share in the gain (profit and will bear loss, if any.

Chetan gave notice on 31st March, 2024 to retire with effect from 30th September, 2024. On that date, the balance of his capital was ₹1,60,000 and his Current Account (in debit)  ₹5,000. The profits for the three preceding completed years were: I- ₹45,000, II- ₹30,000 and III- ₹24,000.

Revaluation of assets and reassessment of liabilities resulted in neither gain (profit) nor loss.

What amount is due to Chetan in accordance with the partnership agreement?

Answer:

CHETAN’S CURRENT ACCOUNT
Particulars₹ (Dr.)Particulars₹ (Cr.)
To Balance bld5,000By Profit & Loss Suspense A/c5,500
To Chetan’s Capital A/c (Balancing Figure)17,000By Aman’s Current A/c(Share of Goodwill)8,250
  By Bharat’s Current A/c(Share of Goodwill)8,250
 22,000 22,000

Working Notes:

W.N. – 1 (Calculation of Share of Profit)

The profits for the three preceding completed years were: I- ₹45,000, II- ₹30,000 and III- ₹24,000.

 Average Profit= 45,000+30,000+24,000/3= 33,000

Share of Chetan’s Profit= 33,000×1×6/3×12=5,500

W.N. – 1 (Calculation of Share of Goodwill)

Average Profit= 45,000+30,000+24,000/3= 33,000

Firm’s Goodwill= 33,000×1.5=49,500

Chetan’s Share of Goodwill=49,500×1/3=16,500

Chetan will be compensated by Amar and Bharat in 1:1

Amar and Bharat = 16,500×1/2=8,250

Question 60: (Amit, Bunty, and Charan)

Amit, Bunty and Charan are partners sharing profits and losses in the ratio of 2:2:1. Charan retired on 30th June, 2025. The Balance Sheet of the firm on 31st March, 2025 was as follows:

LiabilitiesAssets
Capital Accounts: Building10,00,000
Amit6.00,000 Investments1,25,000
Bunty6,00,000 Stock2,50,000
Charan4,00,00016,00,000Debtors4,00,000
employee’s’ Compensation Reserve1,00,000Cash at Bank2,00,000
General Reserve3,00,000Cash in Hand1,25,000
Creditors1,00,000  
 21,00,000 21,00,000

It was agreed that amount payable to Charan will be determined by making following adjustments

(a) Building be valued at ₹ 12,00,000.

(b) Investment be valued at ₹ 1,00,000.

(c) Stock to be valued at ₹3,00,000.

(d) Goodwill of the firm be valued at 2 years’ purchase of average profit of last 5 years.

(e) Charans share of profit up to the date of retirement be calculated on the basis of average profit of the preceding three years.

Profits of the preceding five years were as under:

Years2020-21(₹)2021-22(₹)2022-23(₹)2023-24(₹)2024-25(₹)
Profit2,00,0002,35,0003,00,0002,75,0003,25,000

Prepare: (i) Revaluation Account; (ii) Partners’ Capital Accounts and (ii) Balance Sheet after Charan’s retirement.

Answer:

 Revaluation Account
Particulars(₹)Dr.Particulars(₹)Cr.
Investment25,000Building2,00,000
Gain transferred to: Stock50,000
Amit’s Capital A/c90,000   
Bunty’s Capital A/c90,000   
Charan ’s Capital A/c45,0002,25,000  
 2,50,000 2,50,000
Dr.Partners’ Capital AccountsCr.
ParticularsAmitBuntyCharanParticularsAmitBuntyCharan
Charan ’s Capital A/c53,40053,400Balance B/d6,00,0006,00,0004,00,000
Charan ’s Loan A/c6,46,800Revaluation A/c90,00090,00045,000
Balance  C/d7,96,6007,96,600W.C.R. A/c40,00040,00020,000
    G. R. A/c1,20,0001,20,00060,000
    Amit’s Capital A/c53,400
    Bunty’s Capital A/c53,400
    P&L Suspense A/c  15,000
 8,50,0008,50,0006,46,800 8,50,0008,50,0006,46,800
Balance Sheet (after Charan’s retirement)
LiabilitiesAssets
Capital Accounts: Building12,00,000
Amit7,96,600 Investments1,00,000
Bunty7,96,60015,93,200Stock3,00,000
Charan ’s Loan 6,46,800Debtors4,00,000
Creditors1,00,000Cash at Bank2,00,000
  Cash in Hand1,25,000
  P&L Suspense A/c15,000
 23,40,000 23,40,000

Working Notes:

W.N.- 1: Distribution of  employee’s’ Compensation Reserve

A = 1,00,000×2/5=40,000

B = 1,00,000×2/5=40,000

C = 1,00,000×1/5=20,000

W.N.- 2: Distribution of General Reserve

A = 3,00,000×2/5 = 1,20,000

B = 3,00,000×2/5= 1,20,000

C = 3,00,000×1/5 = 60,000

W.N.- 3: Valuation of goodwill

Average Profit = 2,00,000+2,35,000+3,00,000+2,75,000+3,25,000/5=2,67,000

Goodwill =2,67,000×2= 5,34,000

Charan’s share of Goodwill= 5,34,000×1/5=1,06,800

Charan will be compensated by Amit and Bunty in 2:2 or 1:1 as follow

Amount of compensation = 1,06,800×1/2=53,400

W.N.- 3: Calculation of Share of Profit till the date of retirement on the basis of past three year profits

Average Profit = 3,00,000+2,75,000+3,25,000/3=3,00,000

Profit share of Charan = 3,00,000×1×6/5×12= 15,000

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