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, 2026. 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 |
|||||
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Date |
Particulars |
L.F. |
Debit (₹) |
Credit (₹) |
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2026 |
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June 30 |
X’s Capital A/c |
Dr. |
|
15,000 |
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|
Z’s Capital A/c |
Dr. |
|
5,000 |
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To Y’s Capital A/c |
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20,000 |
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(Y’s share of goodwill adjusted through X and Y’s Capital Account in gaining ratio, i.e. 3 : 1) |
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June 30 |
Profit and Loss Suspense A/c |
Dr. |
|
12,500 |
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To Y’s Capital A/c |
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12,500 |
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(Y’s profit share till his death debited to P&L Suspense A/c) |
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Working Notes:
WN1: 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
WN2: 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, 2023 till June 30, 2024)
Y's share of Profit (till death) = 1,50,000 × 2/6 × 3/12= ₹ 12,500
Question 7:
Adil,
Bunty and Cris 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.
Bunty died on 1st January, 2025. The firm's profits for the last four
years ended 31st December, were as:
2023− ₹
1,20,000; 2024 − ₹
80,000; 2025 − ₹
40,000; 2026 − ₹
80,000.
(a) Determine the amount that should be credited to Bunty 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 Bunty’s Capital Account in 4 years = Net profit for
last four years × Bunty’s Share
=1,20,000+80,000+80,000+4,000×3/8
=3,20,000×3/8=1,20,000
(b)
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Journal |
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|
Particulars |
L.F. |
Debit ₹ |
Credit ₹ |
|
|
Adil’s Capital A/c |
Dr. |
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48,000 |
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S’s Capital A/c |
Dr. |
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12,000 |
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To Bunty’s Capital A/c |
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60,000 |
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(Bunty’s share of goodwill adjusted) |
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Working Notes:
Bunty’s Share of Goodwill = ₹
60,000
Old Ratio (Adil, Bunty and Cris) = 4 : 3 : 1
Bunty died.
∴ Gaining Ratio = 4 : 1
This share of goodwill is to be distributed between Adil and Cris in their gaining
ratio (i.e. 4 : 1)
Adil’s Share of Goodwill = 60,000×4/5=48,000
Cris’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 firm was valued at 60,000:
Pass the necessary entries for the treatment of goodwill under the following conditions:
(a) When Goodwill does not exist in the books of account and
(b) When Goodwill exist in the books of account at Rs. 30,000.
Answer:
(a) When Goodwill does not exist in the books of account
|
Date |
Particulars |
|
Dr. ( ₹) |
Cr. ( ₹) |
|
(i) |
Q's Capital A/c |
Dr. |
10,000 |
|
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R's Capital Ale |
|
20,000 |
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To P's Capital A/e |
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30,000 |
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(Being Goodwill is adjusted) |
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(b) When Goodwill exist in the books of account at Rs. 30,000.
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Date |
Particulars |
|
Dr. ( ₹) |
Cr. ( ₹) |
|
(i) |
P's Capital A/c |
Dr. |
30,000 |
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Q's Capital A/c |
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30,000 |
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R's Capital Ale |
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To Goodwill A/c |
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30,000 |
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(Being Written-off) |
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(ii) |
Q's Capital A/c |
Dr. |
10,000 |
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R's Capital Ale |
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20,000 |
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To P's Capital A/e |
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30,000 |
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(Being Goodwill is adjusted) |
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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, 2025. 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 Modified)
Answer:
Sales during that period of the firm from 1st April, 2025 to 30th June, 2025 ₹ 6,00,000
The rate of profit during the past four years had been 10% on sales
Profit of the firm from 1st April, 2025 to 30th June, 2025 is ₹ 6,00,000 × 10/100 = ₹ 60,000
Share of Profit is ₹ 60,000 × 2/6 = ₹ 20,000
Question 10:
Ram, Manu and Hari were partners in a firm. Hari died on 30th June, 2025. His share of profit from the closure of the last accounting year till the date of death was to be calculated on the basis of the average of three completed financial years of profits before death. Profits for the years ended 31st March, 2023, 2024 and 2025 were ₹1,10,000; ₹1,20,000 and ₹1,30,000 respectively. Calculate Hari’s share of profit till the date of his death and pass necessary Journal entry for the same.
Answer:
Total profit previous three years = ₹1,10,000 + ₹1,20,000+ ₹1,30,000 = ₹3,60,000
Average Profit previous three years = ₹3,60,000/3 = ₹1,20,000
Hari died on 30th June, 2025 after 3 month of beginning of the year (from 1 April 2025 to 30th June, 2025)
Hari’s share of Profit for 3 month = ₹1,20,000 × 3 × 1 ÷ 12 × 3 = ₹10,000
Ts Grewal Solution 2026-2027
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Class 12 / Volume – I