Question 26:
Anu and Bhagwan were partners in a firm sharing profits in the
ratio of 3 : 1. Goodwill appeared in the books at `4,40,000.
Raja was admitted to the partnership. The new profit-sharing ratio among Anu, Bhagwan and Raja was 2 : 2 : 1.
Raja brought `1,00,000
for his capital and necessary cash for his goodwill premium. Goodwill of the
firm was valued at `2,50,000.
Record necessary Journal entries in the books of the firm for the above
transactions.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
Anu’s Capital A/c |
Dr. |
|
3,30,000 |
|
|
Bhagwan’s Capital A/c |
Dr. |
|
1,10,000 |
|
|
To
Goodwill A/c |
|
|
|
4,40,000 |
|
(Old goodwill
written off in old ratio) |
|
|
|
|
|
|
|
|
|
|
|
Cash A/c |
Dr. |
|
1,50,000 |
|
|
To Raja’s
Capital A/c |
|
|
|
1,00,000 |
|
To
Premium for Goodwill A/c |
|
|
|
50,000 |
|
(Capital and
goodwill brought in by Raju) |
|
|
|
|
|
|
|
|
|
|
|
Premium for
Goodwill A/c |
Dr. |
|
50,000 |
|
|
Bhagwan’s Capital A/c 320×2,50,000 |
Dr. |
|
37,500 |
|
|
To Anu’s Capital A/c 720×2,50,000 |
|
|
|
87,500 |
|
(Premium for
goodwill adjusted) |
|
|
|
|
Working Notes:
WN1 Calculation of Share in Old
Goodwill
Anu's share=4,40,000×3/4=3,30,000
Bhagwan's share=4,40,000×1/4=1,10,000
WN2 Calculation of Raja's Share of
Goodwill
Raja's Share of Goodwill=Firm's Goodwill×Raja's Profit Share
=2,50,000×1/5=50,000
WN3 Calculation of Sacrificing Ratio
Sacrificing Ratio=Old Share-New Share
Anu's=3/4-2/5=7/20(sacrifice)
Bhagwan's=1/4-2/5=-3/20(gain)
Question 27:
Ram and Mohan are
partners in a firm sharing profits in the ratio of 3 :
2. On 1st April, 2023, they admit Sohan
as a partner for 1/4th share in the profits. Sohan
contributed following assets towards his capital and for his share of goodwill:
Stock ` 60,000; Debtors
` 80,000; Land ` 1,00,000, Plant and Machinery ` 40,000.
On the date of admission of Sohan, the goodwill of
the firm was valued at ` 6,00,000.
Pass necessary Journal entries in the books of the firm on Sohan's
admission.
(1) Partners do not withdraw
share of goodwill.
(2) Partners withdraw half of
their share of goodwill.
Answer:
(1)
Partners
do not withdraw share of goodwill.
Journal |
|||||
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
2023 |
|
|
|
|
|
April 1 |
|
|
|
|
|
|
Debtors A/c |
Dr. |
|
80,000 |
|
|
Land A/c |
Dr. |
|
1,00,000 |
|
|
Plant and Machinery A/c |
Dr. |
|
40,000 |
|
|
To Sohan’s Capital A/c |
|
|
1,30,000 |
|
|
To Premium for Goodwill A/c |
|
|
1,50,000 |
|
|
(Z brought assets for his share of goodwill and Capital) |
|
|
|
|
|
|
|
|
|
|
April 1 |
|
|
|
|
|
|
To Ram’s Capital A/c |
|
|
90,000 |
|
|
To Mohan’s Capital A/c |
|
|
60,000 |
|
|
(Sohan’s share of Goodwill distributed between Ram and Mohan in sacrificing ratio) |
|
|
|
|
|
|
|
|
|
Working Notes:
WN1
SOHAN’s share of goodwill=6,00,000×1/4=1,50,000
WN2
Distribution of SOHAN’s Goodwill
RAM will get =1,50,000×3/5=90,000
MOHAN will get =1,50,000×2/5=60,000
(2)
Partners withdraw half of
their share of goodwill.
Journal |
|||||
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
2023 |
|
|
|
|
|
April 1 |
|
|
|
|
|
|
Debtors A/c |
Dr. |
|
80,000 |
|
|
Land A/c |
Dr. |
|
1,00,000 |
|
|
Plant and Machinery A/c |
Dr. |
|
40,000 |
|
|
To Sohan’s Capital A/c |
|
|
1,30,000 |
|
|
To Premium for Goodwill A/c |
|
|
1,50,000 |
|
|
(Z brought assets for his share of goodwill and Capital) |
|
|
|
|
|
|
|
|
|
|
April 1 |
|
|
|
|
|
|
To Ram’s Capital A/c |
|
|
90,000 |
|
|
To Mohan’s Capital A/c |
|
|
60,000 |
|
|
(Sohan’s share of Goodwill distributed between Ram and Mohan in sacrificing ratio) |
|
|
|
|
|
Ram’s Capital A/c Dr. |
|
75,000 |
|
|
|
Mohan’s Capital A/c Dr. |
|
|
45,000 |
|
|
To Bank A/c |
|
|
30,000 |
|
|
(Partners withdraw half of their share of goodwill) |
|
|
|
|
|
|
|
|
|
Working
Notes:
WN1
SOHAN’s share of goodwill=6,00,000×1/4=1,50,000
WN2
Distribution of SOHAN’s Goodwill
RAM will get =1,50,000×3/5=90,000
MOHAN will get =1,50,000×2/5=60,000
WN3
Both the partners have withdrawn half of
share of goodwill as follow:
RAM will get =90,000×1/2=45,000
MOHAN will get =60,000×1/2=30,000
Question 28:
A and B are partners in a
business sharing profits and losses in the ratio of 1/3rd and 2/3rd. On 1st
April, 2022, their capitals were ` 8,000 and ` 10,000 respectively. On that date, they admit C in
partnership and give him 1/4th share in the future profits. C
brings ` 8,000 as his capital and ` 6,000 as goodwill. The amount of goodwill is withdrawn by
the old partners in cash. Pass the journal entries and show the Capital
Accounts of all the Partners. Calculate proportion in which partners would
share profits and losses in future.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
2022 |
|
|
|
|
|
April 1 |
|
|
|
|
|
|
To C’s Capital A/c |
|
|
8,000 |
|
|
To Premium for Goodwill A/c |
|
|
6,000 |
|
|
(C brought capital and his share of goodwill) |
|
|
|
|
|
|
|
|
|
|
April 1 |
|
|
|
|
|
|
To A’s Capital A/c |
|
|
2,000 |
|
|
To B’s Capital A/c |
|
|
4,000 |
|
|
(C’s share of goodwill
distributed between |
|
|
|
|
|
|
|
|
|
|
|
A’s Capital A/c |
Dr. |
|
2,000 |
|
|
B’s Capital A/c |
Dr. |
|
4,000 |
|
|
To Cash A/c |
|
|
6,000 |
|
|
(Amount of goodwill withdrawn by A and B) |
|
|
|
|
|
|
|
|
|
Partners’ Capital Accounts |
|||||||
Dr. |
|
|
|
|
|
|
Cr. |
Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
Cash |
2,000 |
4,000 |
- |
Balance b/d |
8,000 |
10,000 |
- |
|
|
|
|
Cash |
- |
- |
8,000 |
|
|
|
|
Premium for Goodwill |
2,000 |
4,000 |
|
Balance c/d |
8,000 |
10,000 |
8,000 |
|
|
|
|
|
10,000 |
14,000 |
8,000 |
|
10,000 |
14,000 |
8,000 |
|
|
|
|
|
|
|
|
Calculation of New (Future) Ratio
|
A |
B |
OLD RATION |
1 : |
2 : |
C is admitted for ¼ share of profit
Let combined share of all partners after C’s admission be = 1
Combined share of A and B after C’s admission = 1 − C’s share
=1-1/4
=3/4
New
ratio= old ratio × Combined share of A and B in the new firm
A’s |
=1/3×3/4 |
|
=3/12 |
B’s |
=2/3×3/4 |
|
=6/12 |
|
A |
|
B |
|
C |
New profit sharing ratio= |
3/12 |
: |
6/12 |
: |
1/4 |
= |
3/12 |
: |
6/12 |
: |
3/12 |
= |
1 |
: |
2 |
: |
1 |
Distribution of Premium for Goodwill
A will get =6,000×1/3=2,000
B will get =6,000×2/3=4,000
Question 29:
A
and B
were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted C as a new partner for 3/7th
share in the profit and the new profit-sharing ratio will be 2
: 2 : 3. C brought ` 2,00,000
as his capital and ` 1,50,000 as premium for goodwill. Half of their share of
premium was withdrawn by A and B from the firm. Calculate
sacrificing ratio and pass necessary Journal entries for the above transactions
in the books of the firm.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
|
|
|
|
|
|
Cash A/c |
Dr. |
|
3,50,000 |
|
|
To C’s Capital A/c |
|
|
2,00,000 |
|
|
To Premium for Goodwill A/c |
|
|
1,50,000 |
|
|
(C brought capital and Premium for Goodwill) |
|
|
|
|
|
|
|
|
|
|
|
Premium for Goodwill A/c |
Dr. |
|
1,50,000 |
|
|
To A’s Capital A/c |
|
|
1,10,000 |
|
|
To B’s Capital A/c |
|
|
40,000 |
|
|
(Premium for Goodwill distributed) |
|
|
|
|
|
|
|
|
|
|
|
A’s Capital A/c |
Dr. |
|
55,000 |
|
|
B’s Capital A/c |
Dr. |
|
20,000 |
|
|
To Cash A/c |
|
|
75,000 |
|
|
(Half of the goodwill withdrawn by A and B) |
|
|
|
|
|
|
|
|
|
Calculation of Sacrificing Ratio
Sacrificing
Ratio =Old ratio- new ratio
|
A’s |
=3/5-2/7 |
|
|||
|
|
=11/35 |
|
|||
|
B’s |
=2/5-2/7 |
|
|||
|
|
=4/35 |
|
|||
|
X |
|
Y |
|||
Sacrificing Ratio = |
11/35 |
: |
4/35 |
|||
= |
11 |
: |
4 |
|||
Working Notes-
WN1
Distribution of Premium for Goodwill
A will get =1,50,000×11/35=1,10,000
B will get 1,50,000×4/35=40,000
WN2
Amount of Premium for Goodwill withdrawn
A will get =1,10,000×1/2=55,000
B will get =40,000×1/2=20,000
Question 30:
A and B are
partners sharing profits in the ratio of 2 : 1. They
admit C for 1/4th share in profits. C brings
in `
30,000 for his capital and `8,000 out of his share of `10,000 for goodwill. Before
admission, goodwill appeared in books at ` 18,000. Give Journal entries
to give effect to the above arrangement.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
|
|
|
|
|
|
A’s Capital A/c |
Dr. |
|
12,000 |
|
|
B’s Capital A/c |
Dr. |
|
6,000 |
|
|
To Goodwill A/c |
|
|
18,000 |
|
|
(Goodwill written-off) |
|
|
|
|
|
|
|
|
|
|
|
Cash A/c |
Dr. |
|
38,000 |
|
|
To C’s Capital A/c |
|
|
30,000 |
|
|
To Premium for Goodwill |
|
|
8,000 |
|
|
(C brought Capital and goodwill) |
|
|
|
|
|
|
|
|
|
|
|
Premium for Goodwill A/c |
Dr. |
|
8,000 |
|
|
C’s Capital A/c |
Dr. |
|
2,000 |
|
|
To A’s Capital A/c |
|
|
6,667 |
|
|
To B’s Capital |
|
|
3,333 |
|
|
(C’s share of goodwill
distributed between |
|
|
|
|
|
|
|
|
|
Working Notes:
WN1 Writing-off of Goodwill
A’s Capital Account will be debited by =18,000×2/3=12,000
B’s Capital Account will be debited by =18,000×1/3=6,000
WN2 Distribution of C’s share of Goodwill
A will get =10,000×2/3=6,667
B will get =10,000×1/3=3.333
Ts Grewal Solution 2023-2024
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Class 12 / Volume – I