Class 12 Accountancy Chapter 3 NCERT Solutions: Retirement of a Partner

Working out partnership accounts after a partner leaves involves several calculations and accounting treatments. Questions may require you to determine the amount payable to the retiring partner, work out the new profit-sharing or gaining ratio, adjust goodwill and reserves, and calculate the profit due up to the date of retirement.

Class 12 Accountancy Chapter 3 NCERT Solutions offer step-by-step answers to these questions. You can refer to them to check your calculations, follow the treatment of different adjustments, and practise questions related to goodwill, accumulated profits, revaluation, interim profit, capital adjustments, and unsettled dues.

Class 12 Accountancy Chapter 3 NCERT Solutions

Here is the organised set of questions, with each question followed by its step-by-step solution and final answer.

1. Ascertainment of Amount Due

Question: Name four items that are credited to a retiring partner’s capital account upon retirement.

Solution:

The following items are credited to a retiring partner’s capital account:

• Credit balance of the capital account

• Share of goodwill

• Share of accumulated profits and reserves

• Share in the gain or profit on revaluation of assets and liabilities

2. Calculation of New Profit Sharing Ratio (Standard Case)

Question: Asha, Deepti, and Nisha are partners sharing profits in the ratio of 3:2:1. Calculate the new profit-sharing ratio if Deepti retires and no additional information is provided.

Solution:

• Old ratio: 3:2:1

• Deepti's share: 2/6

• In the absence of any specific information, the continuing partners acquire Deepti's share in their old relative ratio.

• Asha and Nisha's old relative ratio is 3:1.

Answer: The new profit-sharing ratio of Asha and Nisha is 3:1.

3. Calculation of New Profit Sharing Ratio (Acquired Proportion)

Question: Naveen, Suresh, and Tarun are partners sharing profits in the ratio of 5:3:2. Suresh retires, and his share is acquired by Naveen and Tarun in the ratio of 2:1. Calculate the new profit-sharing ratio.

Solution:

Suresh's share:

310\frac{3}{10}

Naveen's acquired share:

23×310=210\frac{2}{3}\times\frac{3}{10}=\frac{2}{10}

Tarun's acquired share:

13×310=110\frac{1}{3}\times\frac{3}{10}=\frac{1}{10}

Naveen's new share:

510+210=710\frac{5}{10}+\frac{2}{10}=\frac{7}{10}

Tarun's new share:

210+110=310\frac{2}{10}+\frac{1}{10}=\frac{3}{10}

Answer: The new profit-sharing ratio is 7:3.

4. Calculation of Gaining Ratio

Question: Amit, Dinesh, and Gagan share profits in the ratio of 5:3:2. Dinesh retires. Amit and Gagan decide to share future profits in the ratio of 3:2. Calculate the gaining ratio.

Solution:

The formula is:

Gaining Share=New Share−Old Share\text{Gaining Share}=\text{New Share}-\text{Old Share}

Amit's gain:

35−510=6−510=110\frac{3}{5}-\frac{5}{10} =\frac{6-5}{10} =\frac{1}{10}

Gagan's gain:

25−210=4−210=210\frac{2}{5}-\frac{2}{10} =\frac{4-2}{10} =\frac{2}{10}

Therefore:

Gaining Ratio=1:2\text{Gaining Ratio}=1:2

Answer: The gaining ratio is 1:2.

5. Treatment of Goodwill (When Not Appearing in Books)

Question: Keshav, Nirmal, and Pankaj share profits in the ratio of 4:3:2. Nirmal retires, and goodwill is valued at Rs. 72,000. Keshav and Pankaj agree to share future profits in the ratio of 5:3. Pass the journal entry to record goodwill.

Solution:

Nirmal's share of goodwill:

Rs. 72,000×39=Rs. 24,000Rs. 72,000\times\frac{3}{9}=Rs. 24,000

Keshav's gain:

58−49=1372\frac{5}{8}-\frac{4}{9} =\frac{13}{72}

Pankaj's gain:

38−29=1172\frac{3}{8}-\frac{2}{9} =\frac{11}{72}

Therefore, the gaining ratio is:

13:1113:11

Journal Entry:

Being Nirmal's share of goodwill adjusted in the gaining ratio.

6. Treatment of Goodwill (When Existing Goodwill Appears in Books)

Question: Hanny, Pammy, and Sunny share profits in the ratio of 3:2:1. Existing goodwill in the books is Rs. 60,000. Pammy retires, and goodwill is valued at Rs. 84,000. Pass the entry to write off existing goodwill.

Solution:

Existing goodwill is written off among all partners in their old profit-sharing ratio of 3:2:1.

• Hanny's share = Rs. 30,000

• Pammy's share = Rs. 20,000

• Sunny's share = Rs. 10,000

Journal Entry:

Being existing goodwill written off in the old profit-sharing ratio.

7. Hidden Goodwill

Question: P, Q, and R share profits in the ratio of 3:2:1. R retires, and his capital balance after all adjustments is Rs. 60,000. P and Q agree to pay him Rs. 75,000 in full settlement. Calculate R's share of hidden goodwill and pass the adjusting entry.

Solution:

R's share of hidden goodwill:

Rs. 75,000−Rs. 60,000=Rs. 15,000Rs. 75,000-Rs. 60,000=Rs. 15,000

P and Q gain R's share in the ratio of 3:2.

P's share:

Rs. 15,000×35=Rs. 9,000Rs. 15,000\times\frac{3}{5}=Rs. 9,000

Q's share:

Rs. 15,000×25=Rs. 6,000Rs. 15,000\times\frac{2}{5}=Rs. 6,000

Journal Entry:

Being R's share of hidden goodwill adjusted through P and Q.

8. Accumulated Profits Adjustment

Question: Inder, Gajender, and Harinder share profits in the ratio of 3:2:1. General Reserve in the balance sheet shows Rs. 90,000. Pass the journal entry to distribute the reserve on Inder's retirement.

Solution:

The General Reserve is distributed among all partners in their old profit-sharing ratio.

• Inder's share = Rs. 90,000 × 3/6 = Rs. 45,000

• Gajender's share = Rs. 90,000 × 2/6 = Rs. 30,000

• Harinder's share = Rs. 90,000 × 1/6 = Rs. 15,000

Journal Entry:

Being General Reserve transferred to all partners in the old profit-sharing ratio.

9. Profit Share for Intervening Period (Time Basis)

Question: Maira, Shabnam, and Vipul share profits in the ratio of 5:4:1. Profit for the year ended March 31, 2019, was Rs. 1,00,000. Vipul retires on June 30, 2019. Calculate Vipul's share of profit up to the date of retirement based on last year's profit.

Solution:

Intervening period:

April 1 to June 30=3 monthsApril\ 1\ to\ June\ 30=3\ months

Profit for the intervening period:

Rs. 1,00,000×312=Rs. 25,000Rs. 1,00,000\times\frac{3}{12}=Rs. 25,000

Vipul's share:

Rs. 25,000×110=Rs. 2,500Rs. 25,000\times\frac{1}{10}=Rs. 2,500

Answer: Vipul's share of profit is Rs. 2,500.

Journal Entry:

10. Profit Share for Intervening Period (Turnover/Sales Basis)

Question: Bakul, Champak, and Darshan share profits in 5:4:1. Sales for 2015–16 were Rs. 8,00,000 and profit was Rs. 1,00,000. Champak dies on June 30, 2017. Sales from April 1, 2017 to June 30, 2017 were Rs. 1,50,000. Calculate Champak's share of profit.

Solution:

Profit rate on sales:

Rs. 1,00,000Rs. 8,00,000×100=12.5%\frac{Rs. 1,00,000}{Rs. 8,00,000}\times100=12.5\%

Profit for the intervening period:

Rs. 1,50,000×12.5%=Rs. 18,750Rs. 1,50,000\times12.5\%=Rs. 18,750

Champak's share:

Rs. 18,750×410=Rs. 7,500Rs. 18,750\times\frac{4}{10}=Rs. 7,500

Answer: Champak's share of profit is Rs. 7,500.

11. Adjustment of Capital (Fixed Capital Specified)

Question: Mohit, Neeraj, and Sohan share profits in 2:1:1. Neeraj retires. Mohit and Sohan fix total capital of the new firm at Rs. 1,20,000 (New ratio 2:1). Existing adjusted capitals are Mohit Rs. 82,000 and Sohan Rs. 41,000. Calculate cash to be paid off or brought in.

Solution:

Mohit's required capital:

Rs. 1,20,000×23=Rs. 80,000Rs. 1,20,000\times\frac{2}{3}=Rs. 80,000

Sohan's required capital:

Rs. 1,20,000×13=Rs. 40,000Rs. 1,20,000\times\frac{1}{3}=Rs. 40,000

Mohit's excess capital:

Rs. 82,000−Rs. 80,000=Rs. 2,000Rs. 82,000-Rs. 80,000=Rs. 2,000

Sohan's excess capital:

Rs. 41,000−Rs. 40,000=Rs. 1,000Rs. 41,000-Rs. 40,000=Rs. 1,000

Both partners have capital exceeding their required amounts.

Answer:

• Mohit will withdraw Rs. 2,000.

• Sohan will withdraw Rs. 1,000.

• No additional capital needs to be brought in.

12. Statutory Provision on Unsettled Claims (Section 37)

Question: What options are available to a retiring partner if the amount due to him is not settled immediately and there is no specific agreement in the deed?

Solution:

Under Section 37 of the Indian Partnership Act, 1932, an outgoing partner can claim either:

1. Interest at 6% per annum on the unpaid amount from the date of retirement until payment; or

2. A share of the profits earned by the firm during the period attributable to the use of the retiring partner's share of the firm's property.

Answer: The retiring partner can claim either 6% per annum interest on the unpaid amount or the applicable share of profits attributable to the use of his share in the firm's property.

Class 12 Accountancy Chapter 3 NCERT Solutions PDF

Go through the Class 12 Accountancy Chapter 3 NCERT Solutions PDF for solved questions on retirement of a partner, including goodwill adjustments, gaining ratio, accumulated reserves, interim profit, capital changes, and the amount payable to the retiring partner.

Why Choose Class 12 Accountancy Chapter 3 NCERT Solutions?

Class 12 Accountancy Chapter 3 NCERT Solutions can support your revision by providing solved examples for the accounting adjustments involved in a partner's retirement.

• Verify Your Answers: Match your calculations with the given solutions after solving each question on your own.

• Work on Ratio-Based Questions: Practise new profit-sharing ratios and gaining ratios across different retirement situations.

• Learn Goodwill Treatment: Understand how existing goodwill, hidden goodwill, and the retiring partner's share are adjusted.

• Improve Journal Entry Practice: Revisit entries involving goodwill, reserves, capital accounts, and other retirement adjustments.

• Calculate Profit for the Interim Period: Practise determining profit shares using time-based and turnover-based methods.

• Handle Capital Changes: Learn how to calculate the amount partners need to bring in or withdraw when capital is adjusted.

• Revise Section 37: Recall the provisions related to an unpaid amount due to a retiring partner.

• Strengthen Exam Preparation: Use the solved questions to revise key concepts and check your accuracy before examinations.

Retirement of a partner affects the rights, profits, goodwill, and capital arrangements of the continuing partnership. Working through different situations helps you identify which accounting treatment applies in each case. Class 12 Accountancy Chapter 3 NCERT Solutions provide solved examples that can be used to practise these adjustments and review the chapter before examinations.