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.

Net Amount of installment payable at the end of 2nd year to Kabir is

Rs. 25,000

Rs. 34,000

Rs. 31,000

Rs. 37,000

✅ Correct Option: 2

The total amount due to Kabir = Rs. 1,00,000

This will be paid in 4 equal yearly installments, so:

Principal amount per installment = $\frac{1,00,000}{4}$ = Rs. 25,000

At the end of Year 1:

Opening balance = Rs. 1,00,000

Interest @ 12% = $1,00,000 \times \frac{12}{100}$ = Rs. 12,000

Principal installment = Rs. 25,000

Total payment = Rs. 25,000 + Rs. 12,000 = Rs. 37,000

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

At the end of Year 2:

Opening balance = Rs. 75,000

Interest @ 12% on unpaid balance = $75,000 \times \frac{12}{100}$ = Rs. 9,000

Principal installment = Rs. 25,000

Total payment at end of Year 2 = Rs. 25,000 + Rs. 9,000 = Rs. 34,000

The interest keeps reducing each year because it is calculated only on the unpaid balance (which reduces as installments are paid).

2023: 29 May Shift 2

Which of the following will be shown on the credit side of Deceased Partner A/C?

A. Revaluation Gain Share

B. Goodwill written off

C. Share of profit till date of death

D. Drawings till date of death

E. Interest on capital till date of death

Choose the correct answer from the options given below:

2026: 31 May Shift 1

In the case of a death of a partner in a partnership firm, the share of profit of the deceased partner is calculated on the basis of:

2025: 26 May Shift 2

Rohan, Bharti and Leela are partners. On the retirement of Rohan, the goodwill already appears in the balance sheet at Rs. 24,000. The goodwill will be written-off:

2025: 31 May Shift 1

Steps involved in various accounting aspects of retirement or death of a partner -

(A) Settlement of the amounts due to retired/deceased partner

(B) Ascertainment of new profit sharing ratio and gaining ratio

(D) Revaluation of assets and liabilities

Choose the correct answer from the options given below:

2026: 13 May Shift 2

At the time of death of a partner, if general reserve appears in the balance sheet, it should be credited to:

2025: 22 May Shift 1

R, S and K are partners sharing profits in the ratio 8:6:4. On the retirement of R, the new profit sharing ratio between S and K was decided to be 5:3. The Gaining ratio is -

Net Amount of installment payable at the end of 2nd year to Kabir is

Solution

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