[ISC] Q. 23 Retirement of Partner TS Grewal Solution Class 12 (2024-25)

Solution to Question number 23 of the Retirement of Partner Chapter of TS Grewal Book ISC Board 2024-25 session.

Sachin, Agarkar and Ankola are equal partners in a firm. Agarkar retired and the continuing partners decide to share profits of the new firm in the ratio of 5 : 4. An extract of Balance Sheet of the firm before the retirement of Agarkar, on 1st April, 2023 is given below:

Liabilities	₹	Assets	₹
General Reserve Contingency Reserve Profit & Loss A/c Investment Fluctuation Reserve Workmen Compensation Reserve	50,000 5,000 30,000 15,000 12,000	Investment (Market Value ₹ 1,90,000) Advertisement Expenditure (Deferred Revenue)	2,00,000 10,000

A claim on account of Workmen’s Compensation is estimated at ₹ 2,000 only, which is adjusted through Workmen Compensation Reserve. Investment Fluctuation Reserve will also be adjusted as required.

Continuing partners (Sachin and Ankola) decide to record the effect of the above-accumulated profits, losses and reserves (after adjustments) without affecting their book values by passing an adjustment entry.