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TS Grewal Solutions: Class 12 Accountancy Chapter 6

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Free PDF Of Class 12 Accountancy Solutions Available on Vedantu

For students to understand the concepts and score good marks, TS Grewal Class 12, Chapter 6 Solutions are available on the Vedantu website. This chapter focuses on the aspects of accountancy regarding retirement or the death of a partner. TS Grewal Solutions Class 12 Accountancy Volume 1 Chapter 6 considered by most of the commerce students is helpful for different competitive examinations. Let us look into the different aspects of accountancy related to the death or retirement of a partner.

TS Grewal Solutions Class 12 Accountancy Volume 1 Chapter 6 - Retirement/Death of a Partner

Overview of Chapter 6

This chapter deals with the accountancy aspects of profit share when one of the partners is deceased or retiring. TS Grewal explains all the topics clearly. The students will benefit by understanding from the in-depth explanations, as well as getting the important tips required for the calculation of shares.


When it comes to profit sharing, some amounts are due for the deceased or retiring partner. These include credit balance of his capital in the share, credit balance remaining in his current account, shares related to gaining partners in the form of goodwill, the share of the profit when liabilities or assets are revalued, any interest associated with the capital, and any pending salary must be paid to them. Read in detail about these points in Chapter 6 Class 12 Accounts TS Grewal solutions.


The Balancing

Certain amounts should be deducted from the amount to be paid to the deceased or the retiring person. These points are best mentioned in Class 12 Accountancy Chapter 6 TS Grewal Solutions. The debit balance in the existing current account of the deceased or retiring partners has to be deducted, and the share related to accumulated loss or the existing goodwill has to be subtracted. Any drawings or interests related to those drawings have to be considered. Any loss incurred during the liabilities revaluation process and the assets also have to be accounted as well.  


Important Parameters 

Class 12 Accountancy Chapter 6 TS Grewal solutions mention the important parameters needed to calculate the shares for dead or retiring partners. These parameters include calculating the new gain sharing ratio, consideration for goodwill, proper adjustments for revaluation of liabilities and assets, distribution of accumulated losses and profits, distribution of reserves, settlements of accounts, and adjusting capitals as required. To learn the accountancy details related to the death or retirement of a partner, Class 12 TS Grewal Solution 2024-25 is a dependable option.


How to Refer TS Grewal Solutions for Class 12 to Score High Marks

  • Consider every aspect of the calculation very carefully.

  • Consider each case as an individual; do not consider that similar conditions will yield a similar result.

  • Practice different accountancy problems of the same kind repeatedly.

  • Practice different types of accountancy problems to increase the range of knowledge.

  • Students should focus on their weaknesses; make a list of them and practice more on these topics.

  • If students face any difficulty in understanding a concept, consult Ch 6 TS Grewal class 12 solutions. 


Why Should the Students Prefer TS Grewal Solutions Class 12?

  • The solutions of TS Grewal are simple and easy to understand. It makes accounting much easier and more interesting for students.

  • These solutions are created as per the most recent CBSE syllabus and rules.

  • Students can put their accounting skills to the test with these answers. If they run into any difficulties, they can consult the solution before attempting to solve the problem again.

  • It contains in-depth solutions that will help students improve their accounting expertise. Even the most difficult questions are answered in a clear and simple manner.

  • These solutions are one of the best resources for preparing for the Class 12 board exam. It contains a variety of questions that can be used both in daily study sessions and during a review.

  • It is organised chapterwise and contains answers of all of the questions.

  • It is easily accessible and completely free.

Important Topics Links Related to Class 12 Accountancy Volume 1 Chapter 6

Commerce Related Links

Conclusion

To learn in detail the accountancy aspect related to the retirement or death of a partner, Class 12 TS Grewal solutions 2024-25 is considered to be the best and most comprehensive study material. So, students can study these solutions in this article, and clear all their doubts thoroughly.

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FAQs on TS Grewal Solutions: Class 12 Accountancy Chapter 6

1. How do you correctly calculate the Gaining Ratio and the New Profit-Sharing Ratio for the remaining partners when a partner retires?

To solve problems as per the TS Grewal solutions, you must first calculate the Gaining Ratio, which is the proportion in which the remaining partners acquire the outgoing partner's share. The formula is: Gaining Ratio = New Ratio – Old Ratio. The New Profit-Sharing Ratio is the ratio in which the remaining partners will share future profits. If no specific ratio is given for acquiring the share, it is assumed they gain in their old profit-sharing ratio.

2. What is the step-by-step accounting treatment for Goodwill when a partner retires or dies, according to the CBSE 2025-26 syllabus?

The correct method for treating goodwill involves adjusting it through the partners' capital accounts, as per Accounting Standard 26. The steps are:

  • Step 1: Calculate the outgoing partner's share of the firm's total goodwill.
  • Step 2: Calculate the Gaining Ratio of the remaining partners.
  • Step 3: Pass the adjustment journal entry by debiting the gaining partners' capital accounts in their gaining ratio and crediting the retiring/deceased partner's capital account. The entry is: Gaining Partners' Capital A/c (Dr.) to Retiring/Deceased Partner's Capital A/c (Cr.).

3. What are the necessary journal entries for the revaluation of assets and liabilities upon a partner's retirement?

When solving questions on a partner's retirement, a Revaluation Account is prepared to record changes in asset and liability values. The key entries are:

  • For an increase in the value of assets or a decrease in liabilities (gain): Asset A/c (Dr.) / Liability A/c (Dr.) To Revaluation A/c (Cr.).
  • For a decrease in the value of assets or an increase in liabilities (loss): Revaluation A/c (Dr.) To Asset A/c (Cr.) / To Liability A/c (Cr.).
The final profit or loss on revaluation is then transferred to all partners' (including the retiring partner's) capital accounts in their old profit-sharing ratio.

4. How is the final amount due to a retiring partner calculated and settled in the books of the firm?

The final amount due to a retiring partner is determined by preparing their Capital Account. The calculation is as follows:

  • Credits (Amount to be paid): Opening capital balance, share of reserves and accumulated profits, share of goodwill, share in revaluation profit, and interest on capital.
  • Debits (Amount to be deducted): Drawings, interest on drawings, share of accumulated losses, and share in revaluation loss.
The resulting balance is the final amount payable, which can be paid immediately via cash/bank or transferred to a Retiring Partner's Loan Account.

5. What is the correct accounting method for distributing accumulated profits, losses, and reserves at the time of a partner's retirement?

Accumulated profits, reserves (like General Reserve), and losses belong to all partners before retirement. Therefore, they must be distributed among all partners, including the retiring one, in their old profit-sharing ratio. The journal entry for distributing profits/reserves is: General Reserve A/c (Dr.) / Profit & Loss A/c (Dr.) To All Partners' Capital A/cs (Cr.). For losses, the entry is reversed.

6. Why is it necessary to revalue assets and liabilities on a partner's retirement, even if the partnership continues?

Revaluation is essential to ensure fairness to the outgoing partner. Over time, the book values of assets and liabilities may differ from their current market values. Revaluation adjusts these values so that the retiring or deceased partner receives their rightful share of any unrealised appreciation in assets (or bears their share of any decrease). It ensures that the true financial position of the firm is reflected at the time of reconstitution and prevents future disputes among the remaining partners.

7. What is the primary difference in the accounting procedure for settling the dues of a retiring partner versus a deceased partner?

The primary difference lies in who receives the final settlement amount and the calculation period.

  • For a retiring partner, the amount due is paid directly to them or transferred to their loan account.
  • For a deceased partner, the amount is transferred to their Executor's Account, as the legal heir is entitled to the funds.
Additionally, for a deceased partner, profit or loss must be calculated from the last balance sheet date up to the date of death, which is not required for a planned retirement.

8. Why is the retiring partner's share of goodwill adjusted through capital accounts instead of opening a Goodwill Account?

This method is followed to comply with Accounting Standard 26 (AS 26) on Intangible Assets. AS 26 states that internally generated goodwill should not be recognised as an asset in the books of accounts because it is not purchased for a consideration. Therefore, instead of raising and then writing off a Goodwill Account, an adjustment entry is passed. This entry effectively compensates the outgoing partner for their share of goodwill from the gaining partners without creating a fictitious asset on the balance sheet.

9. How do you solve for a deceased partner's share of profit up to the date of death?

A deceased partner's share of profit up to the date of death is an estimate, as accounts are not closed mid-year. There are two common methods for its calculation:

  • On a Time Basis: The profit is estimated based on the previous year's profit, calculated proportionately for the period the partner was alive during the current year. (e.g., Previous Year's Profit x (Period/12) x Deceased Partner's Share).
  • On a Turnover or Sales Basis: The profit is estimated based on the sales up to the date of death, using the previous year's profit-to-sales ratio.
The journal entry passed is: Profit & Loss Suspense A/c (Dr.) to Deceased Partner's Capital A/c (Cr.).

10. What are the common mistakes students make when solving comprehensive problems on a partner's retirement?

When solving questions from TS Grewal on partner's retirement, students often make a few common errors:

  • Forgetting to distribute existing goodwill appearing in the old Balance Sheet among all partners in the old ratio.
  • Using the new profit-sharing ratio instead of the old ratio for distributing reserves and revaluation profit/loss.
  • Incorrectly calculating the gaining ratio, especially when the new ratio is explicitly given.
  • Making calculation errors in the final settlement of the retiring partner's capital account or loan account.