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ICAI, 2013
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1.
2.
3.
4.
5.
6.
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Example 1 :
A, B and C were partners sharing profits in the ratio
of 3:2:1. B retires. Find new PSR and GR.
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New PSR
A
3
GR
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B
2
:
C
1
1
10
2.
a)
b)
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Example 2 :
A, B and C were partners sharing profits in the ratio
of 3:2:1. B retires. Bs share was acquired by A and
C in the ratio of 2:1. Find new PSR and GR.
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Share Acquired =
A
=
=
B
=
=
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13
3.
a)
b)
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Example 3 :
A, B and C were partners sharing profits in the ratio
of 3:2:1. B retires. Bs share was acquired by A as
4/18 and C in the ratio of 2/18. Find new PSR and
GR.
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Share acquired
A
C
New PRS
A
GR
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=
=
=
=
=
=
=
=
=
=
=
4/18
2/18
Old PRS + Share acquired
3/6 + 4/18
9+4
18
13/18
1/6 + 2/18
3+2
18
5/18
4/18 : 2/18
i.e. 2:1
16
4.
a)
b)
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Example 4:
A, B and C were partners sharing profits and losses
in the ratio of 3:2:1. B retires and A and C decide to
share future profits in 3 : 1. Calculate Gain Ratio.
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Old PSR
New PSR
GR
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A
3
3
3
B
2
C
1
1
1
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Example 5:
A, B and C were partners sharing profits and losses
in the ratio of 3:2:1. B retires and A and C decide to
share future profits in 2 : 1. Calculate Gain Ratio.
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A
Old PSR
New PSR
GR
=
A
=
=
GR
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=
=
=
=
=
3
2
New PSR Old PSR
2/3 3/6
43
6
1/6
1/3 - 1/6
2 -1
6
1/6
1/6 : 1/6
i.e 1:1
1
1
21
a)
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b)
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c)
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a)
1.
2.
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XX
XX
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Net Entry :
Continuing Partners Capital A/c Dr.
To Retiring Partners Capital A/c
(GR)
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XX
XX
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Example 1:
A, B and C were partners sharing profits in the ratio
of 3:2:1. B retires and Bs share was acquired by A
and C in the ratio of 3:2. Goodwill of the firm was
Rs. 6,00,000 at the time of Bs retirement. Show
goodwill adjustment.
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Bs share of Goodwill
Accounting entries :
(1) Ac Capital A/c
Cs Capital A/c
To Goodwill A/c
(2) Goodwill A/c
To Bs capital A/c
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= 6,00,000 x 2/6
= Rs. 2,00,000
Dr. 1,20,000
Dr. 80,000
Dr. 2,00,000
2,00,000
2,00,000
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OR
As Capital A/c
Cs Capital A/c
To Bs Capital A/c
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Dr.
Dr.
1,20,000
80,000
2,00,000
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b)
1.
2.
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Dr.
XX
XX
XX
XX
31
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Example 1 :
A, B and C were partners sharing profits in the ratio of
3:2:1. They took a Joint life policy on the combined life of
all the partners for Rs. 1,00,000 on 1.4.2009. Annual
premium on the policy was Rs. 10,000. B died on 1.4.2011.
Show the accounting treatment in the books of the firm
assuming that the policy was treated as an expense in the
books of the firm.
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Journal Entries :
Date
Particulars
1.4.2009
Debit (Rs.)
Dr.
10,000
To Bank A/c
31.3.2010
10000
Dr.
10,000
10,000
Dr.
10,000
To Bank A/c
31.3.2011
10000
Dr.
10,000
Bank A/c
10,000
Dr.
1,00,000
To JLP A/c
1.4.2011
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JLP A/c
Credit (Rs.)
1,00,000
Dr.
1,00,000
To As Capital A/c
50,000
To Bs Capital A/c
33,333
To Cs Capital A/c
16,667
36
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Example 2 :
A, B and C were partners sharing profits in the ratio of
3:2:1. They took a Joint life policy on the combined life of
all the partners for Rs. 1,00,000 on 1.4.2009. Annual
premium on the policy was Rs. 10,000. B died on 1.4.2011.
Show the accounting treatment in the books of the firm
assuming that the policy was treated as an asset in the
books of the firm. The surrender value of the policy was Rs.
3,000 on 31.3.2010 and Rs. 8,000 on 31.3.2011.
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Journal Entries
Date
Particulars
1.4.2009
JLP A/c
Debit (Rs.)
Dr.
10,000
To Bank A/c
31.3.2010
10,000
Dr.
7,000
To JLP A/c
1.4.2010
JLP A/c
7,000
Dr.
10,000
To Bank A/c
31.3.2011
10,000
Dr.
5,000
To JLP A/c
1.4.2011
Bank A/c
5,000
Dr.
1,00,000
To JLP A/c
1.4.2011
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JLP A/c
Credit (Rs.)
1,00,000
Dr.
92,000
To As Capital A/c
46,000
To Bs Capital A/c
30,667
To Cs Capital A/c
15,333
40
Dr.
Date
1.4.09
Rs.
To Bank A/c
Cr.
Date
10,000 31.3.10
31.3.10
Rs.
By P & L A/c
7,000
By Balance c/f
3,000
10,000
1.4.10
To Balance b/f
1.4.10
To Bank A/c
3,000 31.3.11
10,000 31.3.11
10,000
By P & L A/c
5,000
By Balance c/f
8,000
13,000
1.4.11
To Balance b/f
1.4.11
To Capital A/c:
A
46,000
30,667
15,333
8,000 1.4.11
By Bank A/c
1,00,000
92,000
1,00,000
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13,000
1,00,000
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Example 3 :
A, B and C were partners sharing profits in the ratio of
3:2:1. They took a Joint life policy on the combined life of
all the partners for Rs. 1,00,000 on 1.4.2009. Annual
premium on the policy was Rs. 10,000. B died on 1.4.2011.
Show the accounting treatment in the books of the firm
assuming that the policy was treated as an asset along with
JLP Reserve in the books of the firm. The surrender value
of the policy was Rs. 3,000 on 31.3.2010 and Rs. 8,000 on
31.3.2011.
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Journal Entries
Date
Particulars
1.4.2009
JLP A/c
Debit (Rs.)
Dr.
10,000
To Bank A/c
31.3.10
10,000
10,000
10,000
Dr.
7,000
To JLP A/c
1.4.2010
JLP A/c
7,000
Dr.
10,000
To Bank A/c
31.3.11
10,000
10,000
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Credit (Rs.)
10,000
Dr.
5,000
5,000
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1.4.2011
Bank A/c
Dr.
1,00,000
To JLP A/c
1.4.2011
1,00,000
Dr.
8,000
To JLP A/c
1.4.2011
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JLP A/c
8,000
Dr.
1,00,000
To As Capital A/c
46,000
To Bs Capital A/c
30,667
To Cs Capital A/c
15,333
47
Dr.
Date
1.4.09
Rs.
To Bank A/c
Date
10,000 31.3.10
31.3.10
To Balance b/f
1.4.10
To Bank A/c
7,000
By Balance c/f
3,000
10,000
3,000 31.3.11
10,000 31.3.11
5,000
By Balance c/f
8,000
13,000
13,000
1.4.11
To Balance b/f
8,000 1.4.11
1.4.11
To Capital A/c:
1.4.11
50,000
33,333
16,667
By Bank A/c
1,00,000
By JLP
Reserve A/c
8,000
1,00,000
1,08,000
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Rs.
10,000
1.4.10
Cr.
1,08,000
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Dr.
Date
Particulars
Rs.
Date
31.3.10
To JLP A/c
7,000 31.3.10
31.3.10
To Balance c/f
3,000
Particulars
By P & L App.
A/c
10,000
To JLP A/c
5,000 1.4.10
By Balance b/f
31.3.11
To Balance c/f
8,000 31.3.11
By P & L App.
A/c
13,000
To JLP A/c
8,000 1.4.11
8,000
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Rs.
10,000
10,000
31.3.11
1.4.11
Cr.
3,000
10,000
13,000
By Balance b/f
8,000
8,000
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Amount received
2)
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Important Note :
If the outstanding balance of retired / deceased partner includes his
share of goodwill, interest on capital, remuneration, share in JLP etc.,
other partners capital account shall also include the same only for
the purpose of above calculation.
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Ram, Shyam and Ravan were partners sharing profits in the ratio of
3:2:1. Their capital balances as on 31.3.2012 were Rs. 4,00,000, Rs
3,50,000 and Rs. 5,00,000 respectively. On this date General
Reserve balance was Rs. 1,20,000. Ram died on 1.7.2012. Goodwill
of the firm was valued at Rs. 7,20,000. Revaluation loss as on
1.7.2012 was Rs. 2,40,000. Amount due to Rams legal heirs was
settled on 1.10.2012. The firm had taken a Joint life policy for Rs.
4,50,000. The firm made a profit of Rs. 3,00,000 during the year
ended on 31.3.2013. You are required to calculated the profit to be
given to Rams legal heirs.
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Dr.
Capital Account
Ram
120000
962500
To balance b/f
Shyam
80000
725000
Kamal
40000
687500
Ram
By bal. b/f
805000
Shyam
Kamal
400000
350000
500000
By general Res.
60000
40000
20000
By goodwill A/c
360000
240000
120000
BY JLP A/c
225000
150000
75000
37500
25000
12500
1082500
805000
727500
By net profit
(3 months)
1082500
Cr.
727500
Rs. 3,00,000
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a)
b)
Applicability of section 37 :
Rams legal heirs can choose any one of the following :
6% per annum simple interest on Rs. 9,62,500 from 1.7.2012 to
1.10.2012
i.e. 9,62,500 x 6% x 3/12
=
Rs. 14,438
Share of profit i.e
(3,00,000 x 3/12) X .
9,62,500
.
(9,62,500 + 7,25,000 + 6,87,500)
= 75,000 x 9,62,500
=
Rs. 30,395
23,75,000
Rs. 30,395 being the higher amount will be chosen by the legal
heirs of Ram
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