Question 21:
Pass
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)
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Journal |
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Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
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Cash
A/c |
Dr. |
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2,000 |
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To Premium for Goodwill
A/c |
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2,000 |
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(D
brought Premium for Goodwill) |
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Premium
for Goodwill A/c |
Dr. |
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2,000 |
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To B’s Capital A/c |
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1,200 |
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To C’s Capital A/c |
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800 |
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(Premium
for Goodwill distributed between
B and C in sacrificing ratio i.e. 3:2) |
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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)
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Journal |
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Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
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Cash
A/c |
Dr. |
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2,100 |
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To Premium for Goodwill
A/c |
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2,100 |
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(D
brought his share of goodwill in cash) |
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Premium
for Goodwill A/c |
Dr. |
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2,100 |
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To B’s Capital A/c |
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1,400 |
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To C’s Capital A/c |
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700 |
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(Premium
for Goodwill brought distributed between
B and C in sacrificing Ratio i.e. 2:1) |
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Working Note:
WN1
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B |
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C |
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Sacrificing
ratio = |
1/6 |
: |
1/12 |
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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:
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Journal |
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Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
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Cash
A/c |
Dr. |
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15,000 |
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To Premium for Goodwill
A/c |
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15,000 |
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(D
brought his share of goodwill in cash) |
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Premium
for Goodwill A/c |
Dr. |
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15,000 |
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To B’s Capital A/c |
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15,000 |
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(Premium
for goodwill transferred to B’s Capital) |
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C’s
Capital A/c |
Dr. |
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3,750 |
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To B’s Capital A/c |
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3,750 |
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(Goodwill
charged from C’s Capital Account due |
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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
=1-1/3
=2/3
B
and C each share of profit after D’s admission will be
|
=2/3×1/2 |
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=2/6 =1/3 each |
Sacrificing Ratio =Old ratio- new ratio
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A’s |
=3/4-1/3 |
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=5/12 (Sacrifice) |
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B’s |
=1/4-1/3 |
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=-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 profit-sharing 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:
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Journal |
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Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
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|
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Cash
A/c |
Dr. |
|
25,000 |
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To Premium for Goodwill
A/c |
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25,000 |
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(Anita
brought his share of goodwill in cash) |
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Premium
for Goodwill A/c |
Dr. |
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25,000 |
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To Geeta’s
Capital A/c |
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12,500 |
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To Sunita’s
Capital A/c |
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12,500 |
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(Ania’s share of Goodwill distributed in Geeta and Sunita in
their sacrificing Ratio) |
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Working Notes:
WN1
Calculating
of Sacrificing Ratio
Sacrificing Ratio =Old ratio- new ratio
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Geeta’s |
=3/5-5/10 |
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=1/10 |
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Sunita’s |
=2/5-3/10 |
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=1/10 |
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Geeta |
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Sunita |
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Sacrificing
Ratio = |
1/10 |
: |
1/10 |
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1 |
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1 |
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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 profit-sharing ratio of the
partners.
Answer:
|
Journal |
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Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
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Cash
A/c |
Dr. |
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52,000 |
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To C’s Capital A/c |
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40,000 |
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To Premium for Goodwill
A/c |
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12,000 |
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(C
brought Capital and his share of goodwill in cash) |
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Premium
for Goodwill A/c |
Dr. |
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12,000 |
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To A’s Capital A/c |
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6,000 |
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To B’s Capital A/c |
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6,000 |
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(C’s
share of Goodwill distributed in A and B) |
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Working Notes-
WN1
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|
A |
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B |
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Sacrificing
Ratio = |
1/10 |
: |
1/10 |
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1 |
|
1 |
WN2
Calculation
of new profit sharing Ratio
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|
A |
B |
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OLD
RATION |
5 : |
3 |
New ratio= old ratio – sacrificing ratio
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A’s |
=5/8-1/10 |
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=21/40 |
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B’s |
=3/8-1/10 |
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=11/40 |
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X |
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Y |
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Z |
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New profit sharing ratio = |
21/40 |
: |
11/40 |
: |
1/5 |
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= |
21/40 |
: |
11/40 |
: |
8/40 |
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WN3
Distribution
of C’s share of Goodwill (inSacrificing
Ratio)
A and B each will get =12,000×1/2=6,000
Question 25:
Adil
and Bhavyaare
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 ` 1,00,000 for his capital and ` 36,000 for the 1/6th share of
goodwill which he acquires 1/24th from Adiland 1/8th from Bhavya. Profits for the
first year of the new partnership was ` 2,40,000. Pass necessary Journal entries for Cris's admission and
apportion the profit between the partners.
Answer:
|
Journal |
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Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
|
|
|
|
|
|
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Cash
A/c |
Dr. |
|
1,36,000 |
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To Cris’s
Capital A/c |
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1,00,000 |
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To Premium for Goodwill
A/c |
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36,000 |
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(Cris brought capital and his share of goodwill) |
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Premium
for Goodwill A/c |
Dr. |
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36,000 |
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To Adil’s
Capital A/c |
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9,000 |
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To Bhavya’s
Capital A/c |
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27,000 |
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(Cris’s share of goodwill transferred to Adil and Bhavya in their sacrificing
ratio i.e. 3:1) |
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Profit
and Loss Appropriation A/c |
Dr. |
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2,40,000 |
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To Adil’s
Capital A/c |
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1,30,000 |
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To Bhavya’s
Capital A/c |
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70,000 |
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To Cris’s
Capital A/c |
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40,000 |
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(Profit
after Cris’s admission distributed) |
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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
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Adil’s |
=7/12-1/24 |
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=13/24 |
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Bhavya’s |
=5/12-1/8 |
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=7/24 |
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Adil |
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Bhavya |
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Cris |
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New
profit sharing ratio= |
13/24 |
: |
7/24 |
: |
1/6 |
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= |
13/24 |
: |
7/24 |
: |
4/24 |
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= |
13 |
: |
7 |
: |
4 |
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WN4
Distribution
of Profit earned after Cris’s admission (in new
ratio)
Adil will get =2,40,000×13/24=1,30,000
Bhavya will get =2,40,000×7/24=70,000
Cris will get =2,40,000×4/24=40,000
Ts Grewal Solution 2025-2026
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Class 12 / Volume – I