Question 31:
A and B are
partners sharing profits and losses in the ratio of 3 : 2. They admit C
as partner in the firm for 1/4th share in profits which he takes 1/6th from A
and 1/12th from B. C brings in only 60% of his share of
firm's goodwill. Goodwill of the firm has been valued at `1,00,000. Pass necessary
journal entries to record this arrangement.
Answer:
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Journal |
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Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
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Bank 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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(Goodwill
brought in cash) |
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Premium
for Goodwill A/c |
Dr. |
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15,000 |
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To A’s Capital A/c |
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10,000 |
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To B’s Capital A/c |
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5,000 |
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(Goodwill
distributed between A & B in sacrificing ratio) |
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C’s Capital A/c |
Dr |
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10,000 |
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To A’s Capital A/c |
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6,667 |
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To B’s Capital A/c |
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3,333 |
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(Goodwill
adjusted) |
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Working
Notes:
WN1: Calculation of Sacrificing
Ratio
A's sacrifice =16×22=212
B's sacrifice =112
∴ Sacrificing Ratio between A and B = 2:1
WN2: Calculation of share in goodwill of new partner
C's share in goodwill=1,00,000×14= ` 25,000
Goodwill brought in cash ` 15,000(25,000×60%)
Remaining goodwill of ` 10,000 will be adjusted through C's Capital A/c
Question 32:
On the admission of Rao, goodwill
of Murty and Shah is valued at ` 30,000. Rao is to
get 1/4th share of profits. Previously Murty and Shah shared profits in the ratio
of 3 : 2. Rao is unable to bring amount of goodwill. Give Journal entries in
the books of Murty and Shah when:
(a) Goodwill does not exist in the books
(b) Goodwill does not exist in the books at `10,000.
Answer:
(a) Goodwill does not exist in the books
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Journal |
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Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
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Rao’s Capital A/c |
Dr. |
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7,500 |
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To Murty’s Capital A/c |
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4,500 |
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To Shah’s Capital A/c |
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3,000 |
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(Rao’s share of goodwill charged |
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(b) Goodwill does not exist in the books at `10,000.
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Journal |
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Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
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Murty’s Capital A/c |
Dr. |
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6,000 |
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Shah’s Capital A/c |
Dr. |
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4,000 |
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To Goodwill A/c |
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10,000 |
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(Goodwill written-off at the time
of Rao’s |
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Rao’s Capital A/c |
Dr. |
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7,500 |
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To Murty’s Capital A/c |
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4,500 |
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To Shah’s Capital A/c |
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3,000 |
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(Rao’s share of goodwill charged
from his |
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Working Notes;
WN1: Calculation of Rao’s share of Goodwill
Rao’s share of goodwill=30,000×1/4=7,500
WN2: Adjustment of Rao’s share of Goodwill
Murty will get =7,500×3/5=4,500
Shah will get =7,500×2/5=3,000
Question 33:
A, B and C
are in partnership sharing profits and losses in the ratio of 5 : 4 : 1
respectively. Two new partners D and E are admitted. The
profits are now to be shared in the ratio of 3 : 4 : 2 : 2 : 1 respectively. D
is to pay ` 90,000 for his share of Goodwill but E has
insufficient cash to pay for Goodwill. Both the new partners
introduced ` 1,20,000 each as their capital. You are required to pass necessary
Journal entries.
Answer:
|
Journal |
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Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
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Bank A/c |
Dr |
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3,30,000 |
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To
D’s Capital A/c |
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1,20,000 |
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To
E’s Capital A/c |
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1,20,000 |
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To
Premium for Goodwill A/c |
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90,000 |
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(Capital and
Goodwill brought in cash) |
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C’s Capital A/c |
Dr. |
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36,000 |
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E’s Capital A/c |
Dr. |
|
45,000 |
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Premium for
Goodwill A/c |
Dr. |
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90,000 |
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To A’s Capital A/c |
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1,35,000 |
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To B’s Capital A/c |
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36,000 |
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(Goodwill
adjusted) |
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Working
Notes:
WN1: Calculation
of Sacrificing Ratio
A :B :C=5:4:1 (Old Ratio)
A :B :C :D :E=3:4:2:2:1 (New Ratio)
Sacrificing (or Gaining) Ratio = Old Ratio - New share
=510−312=30−1560=1560 (Share of sacrifice)
B's share =4/10−4/12=24−20/60=4/60 (Share of sacrifice)
C's share =1/10−2/12=6−10/60=−4/60 (Share of gain)
WN2: Adjustment of Goodwill
D's share in goodwill for 2/12th share=90,000
∴Total goodwill of the firm = 90,000×12/2= ` 5,40,000
E's share in goodwill = 5,40,000×1/12= ` 45,000
C's share in goodwill = 5,40,000×4/60= ` 36,000
Question 34:
A and B are partners
in a firm with capital of ` 60,000 and ` 1,20,000 respectively. They decide to admit C into
the partnership for 1/4th share in the future profits. C is to bring
in a sum of ` 70,000 as his capital. Calculate amount of goodwill.
Answer:
Actual Capital of the firm after admission of C = A’s Capital + B’s Capital + C’s Capital
= 60,000 + 1, 20,000 + 70,000 = ` 2, 50,000
Capitalised
value of the firm on the basis C’s share= 70,000×4/1=2,80,000
Goodwill=
Capitalised value of the firm – actual capital of the firm
=2,80,000-2,50,000
=30,000
Question 35:
Anil and Sunil are partners in a
firm with fixed capitals of ` 3,20,000
and `
2,40,000 respectively. They admitted Charu as a new partner for 1/4th share in
the profits of the firm on 1st April, 2012. Charu brought `
3,20,000 as her share of capital.
Calculate value of goodwill and record necessary Journal entries. (AI 2013 C)
Answer:
|
Journal |
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Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
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|
2012 April 1 |
Bank A/c |
Dr. |
|
3,20,000 |
|
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To Charu’s Capital A/c |
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3,20,000 |
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(Capital brought in by Charu) |
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Charu’s Current A/c |
Dr. |
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1,00,000 |
|
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To Anil’s Current A/c |
|
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50,000 |
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To Sunil’s Current A/c |
|
|
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50,000 |
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(Charu’s share of goodwill adjusted through current accounts) |
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Working Notes: Calculation of Hidden Goodwill
|
Total capital of the firm on the basis od Charu’s
capital=3,20,000×4/1= |
12,80,000 |
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Less- adjusted cpital of partners + new partner’s capital= |
(8,80,000) |
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|
4,00,000 |
Charu’s share of goodwill=4,00,000×1/4=1,00,000
Ts Grewal Solution 2023-2024
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Class 12 / Volume – I