Page 76 - ISCDEBK-12

Retirement of a Partner 4.3

Solved Questions

Illustration 1 (Gaining Ratio).
Abhay, Krishan, Ajay and Danish are partners sharing profits and losses in the ratio of
1/3, 1/6, 1/3 and 1/6 respectively. Ajay retires and Abhay, Krishan and Danish decide to
share profits and losses equally in future. Calculate the gaining ratio.
Solution: CALCULATION OF GAINING RATIO
Partners New Share Old Share Gain/(Sacrifice) Gaining Ratio

Abhay 1/3 1/3 1/3 – 1/3 = 0 Krishan : Danish = 1/6 : 1/6
Krishan 1/3 1/6 1/3 – 1/6 = 1/6 (Gain) or
Ajay ... 1/3 0 – 1/3 = –1/3 (Sacrifice) 1 : 1
Danish 1/3 1/6 1/3 – 1/6 = 1/6 (Gain)
Illustration 2.
Yash, Madhu, Neha and Kartik are partners sharing profits in the ratio of 3 : 3 : 2 : 1. Yash
retires from the firm. Kartik takes 2/3rd of Yash’s share and Neha takes the balance. Madhu’s
share of profit remains unchanged. Calculate gaining ratio and new profit-sharing ratio.
Solution:
Yash’s share of profit is 3/9; Kartik takes 2/3rd of 3/9, i.e., 2/9 and Neha takes 3/9 – 2/9 = 1/9.
Therefore, the gaining ratio of Neha and Kartik = 1 : 2.
New Profit shares of Madhu, Neha and Kartik will be:
3 2 1 21+ 3 1 2 12+ 3
Madhu = ; Neha = + = = ; Kartik = + = =
9 9 9 9 9 9 9 9 9
:
:
Hence, New Profit-sharing Ratio of Madhu, Neha and Kartik will be = 3 3 3 or 1 : 1 : 1.
9 9 9
Illustration 3.
Arpit, Barun and Binay were partners in a firm sharing profits in the ratio of 3 : 1 : 1.
On 31st March, 2020, their Balance Sheet was as follows:
Liabilities ` Assets `

Creditors 40,000 Bank 31,000
Bills Payable 30,000 Debtors 70,000
Workmen Compensation Reserve 50,000 Less: Provision for Doubtful Debts 2,000 68,000
Capital A/cs: Stock 80,000
Arpit 1,50,000 Building 2,70,000
Barun 1,00,000 Profit and Loss A/c 20,000
Binay 99,000 3,49,000
4,69,000 4,69,000
On 1st April, 2020, Barun retired on the following terms:
(i) Building was to be appreciated by 10%.
(ii) 10% Provision for Doubtful Debts was to be made on Debtors.