CBSE Sample Papers

CBSE Sample Papers from CBSEtuts.com

Partnership Accounting – Accounting Problems On Partners Retirement

March 9, 2019 by admin Leave a Comment

Accounting Problems 

The accounting problems in the event of retirement of a partner can be put as follows:

(i) Adjustment for Goodwill,

(ii) Revaluation of assets  and liabilities.

(iii) Adjustment regarding Reserves and other undistributed profits.

(iv) Adjustments regarding profit sharing ratios.

(v) Payment to the retiring partner.

1. Goodwill. The retiring partner will be entitled to his share of goodwill in the (inn. The problem of goodwill can be dealt in the following two different ways:

(a) Where goodwill account is already appearing in the books:

In such a case if goodwill is properly valued, no further adjustment will be needed. The amount has already been credited to all the partners including the retiring partner.

(b) Where goodwill account is not appearing in lire book. 

There could be severa1 alternatives:

(1) Goodwill account may be raised in the books. 

Goodwill A/c Dr

To Old Partners’ Capital A/c
[membership level=”2″]
(The amount of goodwill credited to old partners including the retiring partner in their old profit sharing ratio)

(ii) In case continuing partners decide not to c*Iinne with the goodwill account, it may be written off.

Continuing Partners Capital A/cs Dr

To Goodwill A/c
[membership level=”2″]
(Goodwill written off to the continuing partners A/cs (i.e. new partners) in the new ratio).

(iii) Entry may be made only with the share of goodwill of the retiring partner. 

Goodwill A/c Dr

Only with the share of the retiring partner).

To Retiring Partner’s Capital A/c

The share of goodwill of the retiring partner may be adjusted in the accounts of the continuing partners without raising a goodwill account. 

ContinuingPartners’ Capital A/cs Dr.

(in the ratio in which they gain on retirement)

To Retiring Partner’s Capital A/c
[/membership]

Filed Under: Accounting Tagged With: Accounting Problems On Partners Retirement, Adjustment for Goodwill, Partners Retirement, Partners Retirement goodwill, Partnership Accounting, profit sharing ratios, undistributed profits

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent Posts

  • Note Making Class 11 CBSE Format, Examples
  • Unseen Passage For Class 11 Literary CBSE With Answers
  • Unseen Passage for Class 11 Discursive CBSE with Answers
  • Unseen Passage for Class 11 Factual CBSE With Answers
  • Rearrange Jumbled Sentences for Class 11 CBSE with Answers
  • Error Correction Exercises for Class 11 CBSE with Answers
  • Sentence Transformation Exercises for Class 11 CBSE with Answers
  • Editing Exercises for Class 11 CBSE with Answers
  • Active and Passive Voice Exercises for Class 11 with Answers CBSE
  • Tenses Exercises for Class 11 CBSE With Answers

Copyright © 2021 · Magazine Pro Theme on Genesis Framework · WordPress · Log in