Question 31:
A and B are partners in a business sharing profits and losses in the ratio of 1/3rd and 2/3rd. On 1st April, 2026, their capitals were ₹ 80,000 and ₹ 1,00,000 respectively. On that date, they admit C in partnership and give him 1/4th share in the future profits. C brings ₹ 80,000 as his capital and ₹ 60,000 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 The amount of goodwill is withdrawn by the old partners in cash.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:
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Journal |
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Date |
Particulars |
L.F. |
Debit ₹ |
Credit ₹ |
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2022 |
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April 1 |
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To C’s Capital A/c |
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80,000 |
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To Premium for Goodwill A/c |
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60,000 |
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(C brought capital and his share of goodwill) |
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April 1 |
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To A’s Capital A/c |
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20,000 |
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To B’s Capital A/c |
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40,000 |
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(C’s
share of goodwill distributed between |
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A’s Capital A/c |
Dr. |
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20,000 |
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B’s Capital A/c |
Dr. |
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40,000 |
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To Cash A/c |
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60,000 |
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(Amount of goodwill withdrawn by A and B) |
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Partners’ Capital Accounts |
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Dr. |
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Cr. |
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Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
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Cash |
20,000 |
40,000 |
- |
Balance b/d |
80,000 |
1,00,000 |
- |
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Cash |
- |
- |
80,000 |
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Premium for Goodwill |
20,000 |
40,000 |
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Balance c/d |
80,000 |
1,00,000 |
80,000 |
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1,00,000 |
1,40,000 |
80,000 |
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1,00,000 |
1,40,000 |
80,000 |
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Calculation of New (Future) Ratio
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A |
B |
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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
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A’s |
=1/3×3/4 |
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=3/12 |
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B’s |
=2/3×3/4 |
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=6/12 |
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A |
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B |
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C |
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New profit sharing ratio= |
3/12 |
: |
6/12 |
: |
1/4 |
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= |
3/12 |
: |
6/12 |
: |
3/12 |
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= |
1 |
: |
2 |
: |
1 |
Distribution of Premium for Goodwill
A will get =60,000×1/3=20,000
B will get =60,000×2/3=40,000
Question 32:
Aruna and Karuna were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted Varuna 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 Aruna and Karuna from the firm. Calculate sacrificing ratio and pass necessary Journal entries for the above transactions in the books of the firm.
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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3,50,000 |
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To Varuna’s Capital A/c |
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2,00,000 |
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To Premium for Goodwill A/c |
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1,50,000 |
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(Varuna brought capital and Premium for Goodwill) |
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Premium for Goodwill A/c |
Dr. |
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1,50,000 |
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To Aruna’s Capital A/c |
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1,10,000 |
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To Karuna’s Capital A/c |
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40,000 |
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(Premium for Goodwill distributed) |
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Aruna’s Capital A/c |
Dr. |
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55,000 |
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Karuna’s Capital A/c |
Dr. |
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20,000 |
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To Cash A/c |
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75,000 |
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(Half of the goodwill withdrawn by A and Karuna) |
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Calculation of Sacrificing Ratio
Sacrificing Ratio =Old ratio- new ratio
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Aruna’s |
=3/5-2/7 |
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=11/35 |
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Karuna’s |
=2/5-2/7 |
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=4/35 |
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Aruna |
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Karuna |
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Sacrificing Ratio = |
11/35 |
: |
4/35 |
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= |
11 |
: |
4 |
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Working Notes-
WN1
Distribution of Premium for Goodwill
Aruna will get =1,50,000×11/35=1,10,000
Karuna will get 1,50,000×4/35=40,000
WN2
Amount of Premium for Goodwill withdrawn
Aruna will get =1,10,000×1/2=55,000
Karuna will get =40,000×1/2=20,000
Question 33:
Mahesh and Suresh were partners in a firm sharing profits and losses in the ratio of 2 : 1. They decided to admit Nita into partnership with 1/4th share in the profits. Nita brought ₹ 2,00,000 for her capital and the requisite amount of goodwill premium in cash. The goodwill of the firm is valued at ₹ 12,00,000. The new profit-sharing ratio of the partners is 2: 1:1. Mahesh and Suresh withdraw their share of goodwill
Pass necessary Journal entries in the books of the firm for the above transactions.
(CBSE 2023)
Answer:
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Date |
Particulars |
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Dr. (₹) |
Cr. (₹) |
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(i) |
Bank A/c |
Dr. |
5,00,000 |
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To Nita's Capital A/c |
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2,00, 000 |
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To Premium for Goodwill A/c |
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3,00,000 |
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(Being Nita brought for her capital and amount of goodwill premium in cash) |
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(ii) |
Premium for Goodwill A/c |
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3,00, 000 |
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To Mahesh's Capital A/c |
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2,00,000 |
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To Suresh's Capital A/c |
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1,00,000 |
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(Being premium shared) |
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(iii) |
Mahesh's Capital A/c |
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2,00,000 |
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Suresh’s Capital A/c |
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1,00,000 |
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To Bank A/c |
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3,00,000 |
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(Being Mahesh and Suresh withdraw their share of goodwill) |
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Working note:
1. Nita brought the requisite amount of goodwill premium =12,00,000×1/4=3,00,000
Premium 3,00,000 will be shared by Mahesh and Suresh in sacrificing ratio 2:1
Mahesh=3,00,000×2/3=2,00,000
Suresh=3,00,000×1/3=1,00,000
2. Gaining and sacrificing Ratio
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New Ratio |
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Old Ratio |
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Mahesh |
= |
2/3 |
- |
2/4 |
= |
8-6/12 |
= |
2/12 |
Sacrificing Ratio |
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Suresh |
= |
1/3 |
- |
1/4 |
= |
4-3/12 |
= |
1/12 |
Sacrificing Ratio |
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Nita |
= |
0/3 |
- |
1/4 |
= |
0-3/12 |
= |
-3/12 |
Gaining Ratio |
Question 34:
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:
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Journal |
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Date |
Particulars |
L.F. |
Debit ₹ |
Credit ₹ |
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A’s Capital A/c |
Dr. |
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12,000 |
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B’s Capital A/c |
Dr. |
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6,000 |
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To Goodwill A/c |
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18,000 |
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(Goodwill written-off) |
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Cash A/c |
Dr. |
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38,000 |
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To C’s Capital A/c |
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30,000 |
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To Premium for Goodwill |
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8,000 |
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(C brought Capital and goodwill) |
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Premium for Goodwill A/c |
Dr. |
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8,000 |
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C’s Capital A/c |
Dr. |
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2,000 |
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To A’s Capital A/c |
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6,667 |
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To B’s Capital |
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3,333 |
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(C’s
share of goodwill distributed between |
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Working Notes:
WN1Writing-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
WN2Distribution of C’s share of Goodwill
A will get =10,000×2/3=6,667
B will get =10,000×1/3=3.333
Question 35:
Rohit and Mohit were partners in a firm sharing profits and losses in the ratio of 3: 2. Rahul was admitte into partnership for 1/3 share in profits. Goodwill of the firm was valued at 30,000. Rahul brought 40,000 as capital and 5,000 out of his share of goodwill premium in cash. At the time of Rahul's admission, goodwill was appearing in the books of the firm at 15,000.
Pass necessary Journal entries for the above transactions in the books of the firm on Rahul's admission.
(CBSE 2023)
Answer:
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Date |
Particulars |
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L.F. |
(Dr.) ₹ |
(Cr.) ₹ |
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1. |
Rohit's Capital A/c |
Dr. |
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15,000 |
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Mohit's Capital A/c |
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9,000 |
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To Goodwill A/c |
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6,000 |
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Bank A/c |
Dr. |
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45,000 |
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To Z's Capital A/c |
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5,000 |
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To Premium for Goodwill A/c |
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40,000 |
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2. |
Premium for Goodwill A/c |
Dr. |
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5,000 |
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Rahul's Current A/c |
Dr. |
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5,000 |
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To Rohit's Capital A/c |
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6,000 |
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To Mohit's Capital A/c |
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4,000 |
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Working note:
WN 1: calculation of Goodwill of Rahul
Rahul Share of Goodwill = 30,000×1/3=10,000
Note : Since, full amount of goodwill is not brought by Rahul in cash therefore balance is to adjusted by Rahul’s Current.
Ts Grewal Solution 2026-2027
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Class 12 / Volume – I