Partnership

Retirement/Death

Medium

Comprehension:

Answer the questions from based on following paragraph

Preeti, Kabir and Shershah are partners in a firm. Kabir retires from the firm. On his date of retirement, Rs. 1,00,000 became due to him. Preeti and Shershah promised to pay him in four yearly equal installments plus interest @ 12% p.a. on the unpaid balance every year at the end of the year, to which he agreed.

The amount of interest payable at the end of fourth year will be

Rs. 9,000

Rs. 6,000

Rs. 3,000

Rs. 2,500

✅ Correct Option: 3

The total amount due to Kabir is Rs. 1,00,000, which will be paid in 4 equal yearly installments.

Equal installment = $\frac{1,00,000}{4}$ = Rs. 25,000

Interest is charged on the unpaid balance at the end of each year. Let's trace the unpaid balance:

At the end of Year 1:

Unpaid balance after paying Rs. 25,000 = 1,00,000 - 25,000 = Rs. 75,000

At the end of Year 2:

Unpaid balance after paying Rs. 25,000 = 75,000 - 25,000 = Rs. 50,000

At the end of Year 3:

Unpaid balance after paying Rs. 25,000 = 50,000 - 25,000 = Rs. 25,000

At the end of Year 4:

Opening unpaid balance = Rs. 25,000
Interest on Rs. 25,000 @ 12% p.a. = $25,000 \times \frac{12}{100}$ = Rs. 3,000

After this payment and the final installment of Rs. 25,000, Kabir's account will be fully settled.

The amount of interest payable at the end of fourth year = Rs. 3,000

2025: 15 May Shift 1

The sum due to the retiring partner includes :

(A) His share of profits up to the date of retirement.

(B) His share of goodwill;

(D) His share in the gain of revaluation of assets and liabilities;

Choose the correct answer from the options given below:

2026: 13 May Shift 2

Karan, Neha and Pankaj are partners sharing profits and losses in the ratio of 4 : 3 : 2. Neha retires and the goodwill is valued at Rs. 72,000. Karan and Pankaj decided to share future profits and losses in the ratio of 5 : 3. The journal entry for adjustment of goodwill will be:

2026: 11 May Shift 2

At the time of retirement of a partner, Advertisement Suspense A/c appearing in the balance sheet would be :

2022: 8 Aug Shift 2

In case of retirement or death of a partner, all accumulated profit and losses are transferred in capital account of partners in the:

2025: 24 May Shift 1

A, B and C are partners in a firm. On retirement/death of C, his capital account will be credited with:

2026: 31 May Shift 1

Arrange the steps in order at the time of retirement of a partner.

A. Transfer of retired partner share of profit.

B. Calculation of goodwill.

C. Settlement of retiring partner capital.

D. Revaluation of assets & liabilities

Choose the correct answer from the options given below:

The amount of interest payable at the end of fourth year will be

Solution

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