Question 26:
Aayush and Aarushi are partners sharing profits and losses in the ratio of 3: 2. They admitted Naveen into partnership for 1/4th share. Goodwill of the firm was to be valued at three years' purchase of super profits. Average net profit of the firm was 20,000. Capital investment in the business was 50,000 and Normal Rate of Return was 10%. Calculate the amount of Goodwill premium brought by Naveen. (CBSE 2023)
Answer:
Normal Profit = 50,000×10/100=5,000
Super Profit = 20,000-5,000
Super Profit = 15,000
Goodwill =15,000×3=45,000
Goodwill Premium brought by Naveen = 45,000×1/4 = 11,250
Question 27:
A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit C into partnership for 1/5th share. C brings ₹ 30,000 as capital and ₹ 10,000 as goodwill. At the time of admission of C, goodwill appeared in the Balance Sheet of A and B at₹ 3,000. New profit-sharing ratio of the partners will be 5 : 3 : 2. Pass necessary Journal entries.
Answer:
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Journal Entries |
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Date |
Particulars |
L.F. |
Debit ₹ |
Credit ₹ |
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A’s Capital A/c |
Dr. |
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1,800 |
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B’s Capital A/c |
Dr. |
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1,200 |
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To Goodwill A/c |
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3,000 |
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(Goodwill written-off) |
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Cash A/c |
Dr. |
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40,000 |
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To C’s Capital A/c |
Dr. |
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30,000 |
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To Premium for Goodwill A/c |
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10,000 |
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(C brought capital and his share of goodwill in cash) |
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Premium for Goodwill |
Dr. |
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10,000 |
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To A’s Capital A/c |
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5,000 |
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To B’s Capital A/c |
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5,000 |
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(Premium for Goodwill distributed) |
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A |
B |
C |
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OLD RATION |
3 : |
2 : |
1 |
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NEW RATIO |
5 : |
3 : |
2 |
Sacrificing Ratio = Old Ratio − New Ratio
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A’s |
=3/5-5/10 |
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=1/10 |
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B’s |
=2/5-3/10 |
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=1/10 |
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X |
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Y |
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Sacrificing Ratio = |
1/10 |
: |
1/10 |
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= |
1 |
: |
1 |
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Distribution of Premium for Goodwill C’s share of Goodwill)
A and B each will get =10,000×1/2=5,000
Goodwill written-off
A’s capital will be debited =3,000×3/5=1,800
B’s capital will be credited =3,000×2/5=1,200
Question 28:
Adil and Bhavya are partners sharing profits and losses in the ratio of 7 : 5. They admit Kamal, their Manager, into partnership who is to get 1/6th share in the business. Kamal brings in ₹ 1,00,000 for his capital and ₹ 36,000 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 ₹ 2,40,000. Pass necessary Journal entries for Kamal's admission and apportion the profit between the partners.
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. |
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1,36,000 |
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To Kamal’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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(Kamal 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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(Kamal’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 Kamal’s Capital A/c |
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40,000 |
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(Profit after Kamal’s admission distributed) |
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Working Note:
WN1
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Adil |
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Bhavya |
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Sacrificing Ratio = |
1/24 |
: |
1/8 |
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1 |
: |
3 |
WN2
Distribution of Kamal’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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Kamal |
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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 Kamal’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
Kamal will get =2,40,000×4/24=40,000
Question 29:
X and Y are partners sharing profits in the ratio of 5:3. Z is admitted as a partner for 3/10th share of profit, half of which was gifted by X and remaining share was taken by Z equally from X and Y. The goodwill of the firm is valued at 54,000. Z brings in his requisite share of firm's goodwill. The profit for the first year of new partnership amounts to 60,000.
Pass the necessary Journal entries to adjust goodwill and to distribute profits.
Answer:
|
Date |
Particulars |
|
L.F. |
(Dr.) ₹ |
(Cr.) ₹ |
|
1. |
Bank |
Dr. |
|
8,100 |
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(a) |
To Premium for Goodwill A/c |
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8,100 |
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(b) |
Premium for Goodwill A/c |
Dr. |
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8,100 |
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To X's Capital A/c |
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4,050 |
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To Y's Capital A/c |
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4,050 |
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2. |
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Dr. |
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60,000 |
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24,000 |
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18,000 |
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18,000 |
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Working Notes:
WN 1: Calculation of Share of Goodwill of Z
Old ratio of X and Y = 5:3
Z is admitted for 3/10 share
Half (3/20) is gifted by X
Remaining 3/20 is taken equally from X and Y
Goodwill of firm = ₹54,000
Z's share of goodwill = 54,000 × 3/20 = ₹8,100
Profit for first year = ₹60,000
New ratio of X:Y:Z = 4:3:3
Sacrificing ratio between
X and Y for goodwill adjustment = 1:1
(because the 3/20 sacrificed is equally split by X and Y)
WN 2: Distribute net profit of ₹60,000 in new ratio (4:3:3)
Total profit =
₹60,000
New ratio: X:Y:Z = 4:3:3
X’s share = 60,000 × 4/10 = ₹24,000
Y’s share = 60,000 × 3/10 = ₹18,000
Z’s share = 60,000 × 3/10 = ₹18,000
Question 30:
Ram and Mohan
are partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2026,
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.
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Journal |
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Date |
Particulars |
L.F. |
Debit ₹ |
Credit ₹ |
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2026 |
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April 1 |
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Debtors A/c |
Dr. |
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80,000 |
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Land A/c |
Dr. |
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1,00,000 |
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Plant and Machinery A/c |
Dr. |
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40,000 |
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To Sohan’s Capital A/c |
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1,30,000 |
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To Premium for Goodwill A/c |
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1,50,000 |
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(Z brought assets for his share of goodwill and Capital) |
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April 1 |
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To Ram’s Capital A/c |
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90,000 |
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To Mohan’s Capital A/c |
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60,000 |
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(Sohan’s share of Goodwill distributed between Ram and Mohan in sacrificing ratio) |
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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 |
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|
Date |
Particulars |
L.F. |
Debit ₹ |
Credit ₹ |
|
|
2026 |
|
|
|
|
|
|
April 1 |
|
|
|
|
|
|
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Debtors A/c |
Dr. |
|
80,000 |
|
|
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Land A/c |
Dr. |
|
1,00,000 |
|
|
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Plant and Machinery A/c |
Dr. |
|
40,000 |
|
|
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To Sohan’s Capital A/c |
|
|
1,30,000 |
|
|
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To Premium for Goodwill A/c |
|
|
1,50,000 |
|
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(Z brought assets for his share of goodwill and Capital) |
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April 1 |
|
|
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To Ram’s Capital A/c |
|
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90,000 |
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To Mohan’s Capital A/c |
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|
60,000 |
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(Sohan’s share of Goodwill distributed between Ram and Mohan in sacrificing ratio) |
|
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Ram’s Capital A/c Dr. |
|
75,000 |
|
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Mohan’s Capital A/c Dr. |
|
|
45,000 |
|
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To Bank A/c |
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|
30,000 |
|
|
|
(Partners withdraw half of their share of goodwill) |
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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
Ts Grewal Solution 2026-2027
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Class 12 / Volume – I