Question 6:
X, Y and Z
were partners in a firm sharing profit in 3 : 2 : 1.
The firm closes its books on 31st March every year. Y died on 30th
June, 2023. On Y's death goodwill of the firm was valued at `
60,000. Y's share in the profit of the firm till the date of his death
was to be calculated on the basis of previous year's profit which was `
1,50,000.
Pass necessary Journal entries for goodwill and Y's share of profit at
the time of his death.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit (`) |
Credit (`) |
|
|
2021 |
|
|
|
|
|
|
June
30 |
X’s Capital A/c |
Dr. |
|
15,000 |
|
|
|
Z’s Capital A/c |
Dr. |
|
5,000 |
|
|
|
To Y’s Capital
A/c |
|
|
|
20,000 |
|
|
(Y’s share of goodwill adjusted
through X and Y’s Capital Account in gaining ratio, i.e. 3 : 1) |
|
|
|
|
|
|
|
|
|
|
|
|
June
30 |
Profit and Loss Suspense A/c |
Dr. |
|
12,500 |
|
|
|
To Y’s Capital A/c |
|
|
|
12,500 |
|
|
(Y’s profit share till his death
debited to P&L Suspense A/c) |
|
|
|
|
|
|
|
|
|
|
|
Working Notes:
WN 1: Calculation of Y's Share
of Goodwill
Goodwill of the Firm= ` 60,000
Y's Share of Goodwill = 60,000 × 2/6 = ` 20,000
20,000 will be debited to X's & Z's Capital A/c in gaining ratio of 3 : 1
X will pay = 20,000 × 3/4 = ` 15,000
Z will pay = 20,000 × 1/4 = ` 5,000
WN 2: Calculation of Y's Share
of Profit
Previous Year's Profit = ` 1,50,000
Y's share of Profit (till death) = Previous Year's Profit × Y's Profit Share × 3 months (April 01, 2021 till June 30, 2021)
Y's share of Profit (till death) = 1,50,000 × 2/6 × 3/12= ` 12,500
Question 7:
P, R and S are
in partnership sharing profits 4/8, 3/8 and 1/8 respectively. It is provided in
the Partnership Deed that on the death of any partner his share of goodwill is
to be valued at one-half of the net profit credited to his account during the
last four completed years.
R died on 1st January, 2023. The firm's profits for the last four
years ended 31st December, were as:
2020 − ` 1,20,000; 2021 − ` 80,000; 2022 − ` 40,000; 2023 − ` 80,000.
(a) Determine the amount that should be credited to R in respect of
his share of Goodwill.
(b) Pass Journal entry without raising Goodwill Account for its adjustment.
Answer:
Calculation
of R’s Share of Goodwill
Profit credited to R’s Capital Account in 4 years = Net profit for last four
years × R’s Share
=1,20,000+80,000+80,000+4,000×3/8
=3,20,000×3/8=1,20,000
(b)
|
Journal |
||||
|
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
P’s
Capital A/c |
Dr. |
|
48,000 |
|
|
S’s
Capital A/c |
Dr. |
|
12,000 |
|
|
To
R’s Capital A/c |
|
|
60,000 |
|
|
(R’s
share of goodwill adjusted) |
|
|
|
|
Working Notes:
R’s Share of Goodwill = ` 60,000
Old Ratio (P, R and S) = 4 : 3 : 1
R died.
∴ Gaining Ratio = 4 : 1
This share of goodwill is to be distributed between P and S in their gaining
ratio (i.e. 4 : 1)
p’s Share of Goodwill = 60,000×4/5=48,000
S’s
share of Goodwill =60,000 ×1/5=12,000
Question 8:
P, Q and R were partners in a firm sharing profits in the ratio of 3:2:1. P dies and the new profit-
sharing ratio of Q and R was agreed to be equal. On P's death, goodwill of the frm was valued at 60,000:
Pass the necessary entries for the treatment of goodwill under the following conditions:
(a) When Goodwill Account is raised and written off.
(b) When Goodwill Account is raised with P's Share of goodwill and written off.
(c) When goodwill is adjusted without opening Goodwill Account.
Answer:
(a) When Goodwill Account is raised and written off.
|
Date |
Particulars |
|
Dr. (`) |
Cr. (`) |
|
(i) |
Goodwill A/c |
Dr. |
60,000 |
|
|
|
To P's Capital A/c |
|
|
30,000 |
|
|
To Q's Capital
A/c |
|
|
20,000 |
|
|
To R's Capital
A/e |
|
|
10,000 |
|
|
(Being Raised) |
|
|
|
|
(ii) |
Q's Capital A/c |
|
30,000 |
|
|
|
R's Capital Ale |
|
30,000 |
|
|
|
To
Goodwill A/c |
|
|
60,000 |
|
|
(Being Written-off) |
|
|
|
(b) When Goodwill Account is raised with P's Share of goodwill and written off.
|
Date |
Particulars |
|
Dr. (`) |
Cr. (`) |
|
(i) |
Goodwill A/c |
Dr. |
30,000 |
|
|
|
To P's Capital A/c |
|
|
30,000 |
|
|
(Being Raised) |
|
|
|
|
(ii) |
Q's Capital A/c |
|
10,000 |
|
|
|
R's Capital Ale |
|
20,000 |
|
|
|
To
Goodwill A/c |
|
|
30,000 |
|
|
(Being Written-off) |
|
|
|
(c) When goodwill is adjusted without opening Goodwill Account.
|
Date |
Particulars |
|
Dr. (`) |
Cr. (`) |
|
|
Q's Capital A/c |
|
10,000 |
|
|
|
R's Capital Ale |
|
20,000 |
|
|
|
To
Goodwill A/c |
|
|
30,000 |
|
|
(Being Written-off) |
|
|
|
Working Note:
Qs Gain = 1/2- 2/6= 1/6;
R'S Gain = 1/2-1/6 =2/6
and Gaining Ratio = 1:2.
Question 9: Dinkar, Navita and Vani were partners sharing profits and losses in the ratio of 3 :2:1. Navita died on 30th June, 2017. Her share of profit for the intervening period was based on the sales during that period, which were ` 6,00,000. The rate of profit during the past four years had been 10% on sales. The firm closes its books on 31st March every year.
Calculate Navita’s share of profit. (CBSE 2019)
Answer:
Sales during that period of the firm from 1st April, 2017 to 30th June, 2017 ` 6,00,000
The rate of profit during the past four years had been 10% on sales
Profit of the firm from 1st April, 2017 to 30th June, 2017 is ` 6,00,000 × 10/100 = ` 60,000
Share of Profit is ` 60,000 × 2/6 = ` 20,000
Question 10: Anil, Sunil and Hari were partners sharing profits equally. Sunil died on 31st December, 2022. In terms of the partnership deed, accounts were prepared for the period ended 31st December, 2022 and net profit was determined at `6,00,000. Pass the Journal entry for the profit share of the partners.
Answer:
|
Date |
Particulars |
|
L.F. |
(Dr.) ` |
(Cr.) ` |
|
2020 31st
Dec. |
Profit
and Loss Appropriation A/c To Anil’s Capital A/c To Sunil’s Capital A/c To Hari’s Capital
A/c (Being
profit distributed) |
Dr. |
|
6,00,000 |
2,00,000 2,00,000 2,00,000 |
Working Notes:
Share of each partner is Equal (1:1:1)
Share of each partner = 6,00,000 × 1/3 = 2,00,000
Ts Grewal Solution 2023-2024
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Class 12 / Volume – I