Question 21:
Give Journal
entries to record the following arrangements in the books of the firm:
(a) B and C are partners sharing profits in the ratio of 3 :
2. D is admitted paying a premium (goodwill) of ` 2,000 for 1/4th share of the profits, shares shares of B
and C remain as before.
(b) B and C are partners sharing profits in the ratio of 3 :
2. D is admitted paying a premium of ` 2,100 for 1/4th share of profits which he acquires 1/6th from B
and 1/12th from C.
Answer:
(a)
Journal 

Date 
Particulars 
L.F. 
Debit ` 
Credit ` 








Cash A/c 
Dr. 

2,000 


To Premium for Goodwill A/c 



2,000 

(D brought Premium for Goodwill) 











Premium for Goodwill A/c 
Dr. 

2,000 


To B’s Capital A/c 



1,200 

To C’s Capital A/c 



800 

(Premium for Goodwill distributed between B and C in sacrificing ratio i.e. 3:2) 










Working Note:
Distribution of premium for Goodwill
B will get =2,000×3/5=1,200
A will get =2,000×2/5=800
(b)
Journal 

Date 
Particulars 
L.F. 
Debit ` 
Credit ` 


Cash A/c 
Dr. 

2,100 


To Premium for Goodwill A/c 



2,100 

(D brought his share of goodwill in cash) 











Premium for Goodwill A/c 
Dr. 

2,100 


To B’s Capital A/c 



1,400 

To C’s Capital A/c 



700 

(Premium for Goodwill brought distributed between B and C in sacrificing Ratio i.e. 2:1) 










Working Note:
WN1

B 

C 
Sacrificing ratio = 
1/6 
: 
1/12 

2 
: 
1 
WN2
Distribution of Premium for Goodwill
B will get =21,00×2/3=1.400
C will get =21,00×1/3=700
Question 22:
B
and
C are in partnership sharing profits and losses as 3 : 1. They admit
D into the firm, D pays premium of ` 15,000 for 1/3rd share of the profits. As between
themselves, B and C agree to share future profits and losses
equally. Draft Journal entries showing appropriations of the premium money.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit ` 
Credit ` 








Cash A/c 
Dr. 

15,000 


To Premium for Goodwill A/c 



15,000 

(D brought his share of goodwill in cash) 











Premium for Goodwill A/c 
Dr. 

15,000 


To B’s Capital A/c 



15,000 

(Premium for goodwill transferred to B’s Capital) 











C’s Capital A/c 
Dr. 

3,750 


To B’s Capital A/c 



3,750 

(Goodwill
charged from C’s Capital Account due 










WN1
Calculation of Sacrificing Ratio:
Let combined share of all partners after D’s admission be = 1
Combined share of B and C after C’s admission be = 1
=11/3
=2/3
B and C each share of profit after D’s admission will be
=2/3×1/2 
=2/6 =1/3 each 
Sacrificing
Ratio =Old ratio new ratio
A’s 
=3/41/3 

=5/12 (Sacrifice) 
B’s 
=1/41/3 

=1/12(gain) 
WN2
C is gaining in new the firm. Hence, C’s gain in
goodwill will be debited to his capital and given to B (sacrificing partner).
Goodwill of the firm= premium of Goodwill brought by D × reciprocal of D’s share
=15,000×3/1=45,000
C’s share of gain in goodwill= goodwill of the firm ×
C’s share of gain
=45,000×1/12=3,750
Question 23:
Geeta and Sunita
are partners in a firm sharing profits in the ratio of 3 : 2. They admit Anita
as a new partner. The new profitsharing ratio between Geeta, Sunita
and Anita will be 5 : 3 : 2. Anita brought in `25,000 for his
share of premium for goodwill. Pass necessary Journal entries for the treatment
of goodwill.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit ` 
Credit ` 








Cash A/c 
Dr. 

25,000 


To Premium for Goodwill A/c 



25,000 

(Anita brought his share of goodwill in cash) 











Premium for Goodwill A/c 
Dr. 

25,000 


To Geeta’s Capital A/c 



12,500 

To Sunita’s Capital A/c 



12,500 

(Ania’s share of Goodwill distributed in Geeta and Sunita in their sacrificing Ratio) 










Working Notes:
WN1
Calculating of Sacrificing Ratio
Sacrificing
Ratio =Old ratio new ratio

Geeta’s 
=3/55/10 




=1/10 



Sunita’s 
=2/53/10 




=1/10 



Geeta 

Sunita 

Sacri ficing Ratio = 
1/10 
: 
1/10 


1 

1 

WN2
Distribution of Geeta’s share of Goodwill
Geeta and Sunita each will get =25,000×1/2=12,500
Question 24:
A and B
are in partnership sharing profits and losses in the ratio of 5 : 3. C
is admitted as a partner who pays ` 40,000 as capital and the necessary amount of goodwill
which is valued at ` 60,000 for the firm. His
share of profits will be 1/5th which he takes 1/10th from A and 1/10th
from B.
Pass Journal entries and also calculate future profitsharing ratio of the
partners.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit ` 
Credit ` 


Cash A/c 
Dr. 

52,000 


To C’s Capital A/c 



40,000 

To Premium for Goodwill A/c 



12,000 

(C brought Capital and his share of goodwill in cash) 











Premium for Goodwill A/c 
Dr. 

12,000 


To A’s Capital A/c 



6,000 

To B’s Capital A/c 



6,000 

(C’s share of Goodwill distributed in A and B) 










Working Notes
WN1

A 

B 
Sacrificing Ratio = 
1/10 
: 
1/10 

1 

1 
WN2
Calculation of new profit sharing Ratio

A 
B 
OLD
RATION 
5 : 
3 
New
ratio= old ratio – sacrificing ratio

A’s 
=5/81/10 




=21/40 



B’s 
=3/81/10 




=11/40 



X 

Y 

Z 

New profit sharing ratio = 
21/40 
: 
11/40 
: 
1/5 

= 
21/40 
: 
11/40 
: 
8/40 

WN3
Distribution of C’s share of Goodwill (in Sacrificing Ratio)
A and B each will get =12,000×1/2=6,000
Question 25:
Adil and Bhavya are
partners sharing profits and losses in the ratio of 7 : 5. They admit Cris,
their Manager, into partnership who is to get 1/6th share in the business. Cris
brings in ` 10,000 for his capital and ` 3,600 for the 1/6th share of goodwill which he acquires
1/24th from Adil and 1/8th from Bhavya. Profits for the first
year of the new partnership was ` 24,000. Pass necessary Journal entries for Cris's
admission and apportion the profit between the partners.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit ` 
Credit ` 








Cash A/c 
Dr. 

13,600 


To Cris’s Capital A/c 



10,000 

To Premium for Goodwill A/c 



3,600 

(Cris brought capital and his share of goodwill) 











Premium for Goodwill A/c 
Dr. 

3,600 


To Adil’s Capital A/c 



900 

To Bhavya’s Capital A/c 



2,700 

(Cris’s share of goodwill transferred to Adil and Bhavya in their sacrificing ratio i.e. 3:1) 











Profit and Loss Appropriation A/c 
Dr. 

24,000 


To Adil’s Capital A/c 



13,000 

To Bhavya’s Capital A/c 



7,000 

To Cris’s Capital A/c 



4,000 

(Profit after Cris’s admission distributed) 










Working Note:
WN1

Adil 

Bhavya 
Sacrificing Ratio = 
1/24 
: 
1/8 

1 
: 
3 
WN2
Distribution of Cris’s share of Goodwill (in sacrificing ratio)
Adil will get =3,600×1/4=900
Bhavya will get =3,600×3/4=2,700
WN3
Calculation of New Profit Sharing Ratio
New
ratio= old ratio – Sacrificing Ratio

Adil’s 
=7/121/24 




=13/24 



Bhavya’s 
=5/121/8 




=7/24 



Adil 

Bhavya 

Cris 

New profit sharing ratio= 
13/24 
: 
7/24 
: 
1/6 

= 
13/24 
: 
7/24 
: 
4/24 

= 
13 
: 
7 
: 
4 

WN4
Distribution of Profit earned after Cris’s admission (in new ratio)
Adil will get =24,000×13/24=13,000
Bhavya will get =24,000×7/24=7,000
Cris will get =24,000×4/24=4,000
Ts Grewal Solution 20222023
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Class 12 / Volume – I
Chapter 1 – Admission of a Partner
Question No. 1 To 5
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Question No. 26 To 30
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