CBSE 2025, Compartment, Set 1

Question

Lalit, Madhur and Neel were partners in a firm sharing profits and losses in the ratio of 2:2:1. Neel retired and his capital after making the necessary adjustments on account of reserves and revaluation of assets and liabilities was ₹10,00,000. Lalit and Madhur agreed to pay Neel ₹22,00,000 in full settlement of his claim. Pass necessary journal entries for the treatment of goodwill and making final payment to Neel.

Edvaya · Accepted Answer

The correct answer is Subjective. **Journal Entries in the Books of the Firm** | Date | Particulars | L.F. | Dr. Amount (₹) | Cr. Amount (₹) | |---|---|---|---|---| | (i) | Lalit's Capital A/c Dr. Madhur's Capital A/c Dr. To Neel's Capital A/c *(Neel's share of hidden goodwill adjusted in the capital accounts of Lalit and Madhur in their gaining ratio of 1:1)* | | 6,00,000 6,00,000 | 12,00,000 | | (ii) | Neel's Capital A/c Dr. To Bank A/c / Cash A/c *(Neel paid in full settlement of his claim)* | | 22,00,000 | 22,00,000 | **Working Notes:** 1. **Hidden Goodwill:** Amount agreed to be paid to Neel (₹22,00,000) - Adjusted Capital of Neel (₹10,00,000) = ₹12,00,000. This is Neel's share of goodwill. 2. **Gaining Ratio:** Old ratio = 2:2:1. Neel (1/5) retires. Since no other info is given, Lalit and Madhur gain in 2:2 (or 1:1) ratio. Hence, the ₹12,00,000 is borne equally by Lalit and Madhur.

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Accountancy > Accounting For Partnership Firms > Retirement And Death Of A Partner

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