12th | Admission of a partner  | Question No. 26 To 30 | Ts Grewal Solution 2024-2025

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.

Journal Entries
Date	Particulars		L.F.	Debit    `	Credit    `
	A’s Capital A/c	Dr.		1,800
	B’s Capital A/c	Dr.		1,200
	To Goodwill A/c				3,000
	(Goodwill written-off)
	Cash A/c	Dr.		40,000
	To C’s Capital A/c	Dr.			30,000
	To Premium for Goodwill A/c				10,000
	(C brought capital and his share of goodwill in cash)
	Premium for Goodwill	Dr.		10,000
	To A’s Capital A/c				5,000
	To B’s Capital A/c				5,000
	(Premium for Goodwill distributed)

	A	B	C
OLD RATION	3  :	2  :	1
NEW RATIO	5  :	3  :	2

 

Sacrificing Ratio = Old Ratio − New Ratio

	A’s	=3/5-5/10
		=1/10
	B’s	=2/5-3/10
		=1/10
			X			Y
Sacrificing Ratio =			1/10	:		1/10
=			1	:		1

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

 

Anu and Bhagwan were partners in a firm sharing profits in the ratio of 3 : 1. Goodwill appeared in the books at  `4,40,000. Raja was admitted to the partnership. The new profit-sharing ratio among Anu, Bhagwan and Raja was 2 : 2 : 1.
Raja brought  `1,00,000 for his capital and necessary cash for his goodwill premium. Goodwill of the firm was valued at  `2,50,000.
Record necessary Journal entries in the books of the firm for the above transactions.

Journal
Date	Particulars		L.F.	Debit `	Credit `
	Anu’s Capital A/c	Dr.		3,30,000
	Bhagwan’s Capital A/c	Dr.		1,10,000
	To Goodwill A/c				4,40,000
	(Old goodwill written off in old ratio)
	Cash A/c	Dr.		1,50,000
	To Raja’s Capital A/c				1,00,000
	To Premium for Goodwill A/c				50,000
	(Capital and goodwill brought in by Raju)
	Premium for Goodwill A/c	Dr.		50,000
	Bhagwan’s Capital A/c 320×2,50,000	Dr.		37,500
	To Anu’s Capital A/c 720×2,50,000				87,500
	(Premium for goodwill adjusted)

Working Notes:

WN1 Calculation of Share in Old Goodwill

Anu's share=4,40,000×3/4=3,30,000

Bhagwan's share=4,40,000×1/4=1,10,000

WN2 Calculation of Raja's Share of Goodwill

Raja's Share of Goodwill=Firm's Goodwill×Raja's Profit Share                                            

=2,50,000×1/5=50,000

WN3 Calculation of Sacrificing Ratio

Sacrificing Ratio=Old Share-New Share

Anu's=3/4-2/5=7/20(sacrifice)

Bhagwan's=1/4-2/5=-3/20(gain)

 

Ram and Mohan are partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2024, 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.

 

(1)               Partners do not withdraw share of goodwill.

 

Journal
Date	Particulars		L.F.	Debit `	Credit `
2024
April 1	Stock A/c	Dr.		60,000
	Debtors A/c	Dr.		80,000
	Land A/c	Dr.		1,00,000
	Plant and Machinery A/c	Dr.		40,000
	To Sohan’s Capital A/c				1,30,000
	To Premium for Goodwill A/c				1,50,000
	(Z brought assets for his share of goodwill and Capital)
April 1	Premium for Goodwill A/c	Dr.		1,50,000
	To Ram’s Capital A/c				90,000
	To Mohan’s Capital A/c				60,000
	(Sohan’s share of Goodwill distributed between Ram and  Mohan in sacrificing ratio)

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
Date	Particulars		L.F.	Debit `	Credit `
2024
April 1	Stock A/c	Dr.		60,000
	Debtors A/c	Dr.		80,000
	Land A/c	Dr.		1,00,000
	Plant and Machinery A/c	Dr.		40,000
	To Sohan’s Capital A/c				1,30,000
	To Premium for Goodwill A/c				1,50,000
	(Z brought assets for his share of goodwill and Capital)
April 1	Premium for Goodwill A/c	Dr.		1,50,000
	To Ram’s Capital A/c				90,000
	To Mohan’s Capital A/c				60,000
	(Sohan’s share of Goodwill distributed between Ram and  Mohan in sacrificing ratio)
	Ram’s Capital A/c                                               Dr.			75,000
	Mohan’s Capital A/c                                           Dr.				45,000
	To Bank  A/c				30,000
	(Partners withdraw half of their share of goodwill)

 

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

 

 

A and B are partners in a business sharing profits and losses in the ratio of 1/3rd and 2/3rd. On 1st April, 2024, their capitals were    ` 8,000 and    ` 10,000 respectively. On that date, they admit C in partnership and give him 1/4th share in the future profits. C brings    ` 8,000 as his capital and    ` 6,000 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.

Journal
Date	Particulars		L.F.	Debit `	Credit `
2022
April 1	Cash A/c	Dr.		14,000
	To C’s Capital A/c				8,000
	To Premium for Goodwill A/c				6,000
	(C brought capital and his share of goodwill)
April 1	Premium for Goodwill A/c	Dr.		6,000
	To A’s Capital A/c				2,000
	To B’s Capital A/c				4,000
	(C’s share of goodwill distributed between A and B in sacrificing ratio i.e. 1:2)
	A’s Capital A/c	Dr.		2,000
	B’s Capital A/c	Dr.		4,000
	To Cash A/c				6,000
	(Amount of goodwill withdrawn by A and B)

 

Partners’ Capital Accounts
Dr.							Cr.
Particulars	A	B	C	Particulars	A	B	C
Cash	2,000	4,000	-	Balance b/d	8,000	10,000	-
				Cash	-	-	8,000
				Premium for Goodwill	2,000	4,000
Balance c/d	8,000	10,000	8,000
	10,000	14,000	8,000		10,000	14,000	8,000

Calculation of New (Future) Ratio

	A	B
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

A’s	=1/3×3/4
	=3/12
B’s	=2/3×3/4
	=6/12

 

	A		B		C
New profit sharing ratio=	3/12	:	6/12	:	1/4
=	3/12	:	6/12	:	3/12
=	1	:	2	:	1

Distribution of Premium for Goodwill

A will get =6,000×1/3=2,000

B will get =6,000×2/3=4,000

 

A and B were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted C 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 A and B from the firm. Calculate sacrificing ratio and pass necessary Journal entries for the above transactions in the books of the firm.

Answer:

Journal
Date	Particulars		L.F.	Debit    `	Credit    `
	Cash A/c	Dr.		3,50,000
	To C’s Capital A/c				2,00,000
	To Premium for Goodwill A/c				1,50,000
	(C brought capital and Premium for Goodwill)
	Premium for Goodwill A/c	Dr.		1,50,000
	To A’s Capital A/c				1,10,000
	To B’s Capital A/c				40,000
	(Premium for Goodwill distributed)
	A’s Capital A/c	Dr.		55,000
	B’s Capital A/c	Dr.		20,000
	To Cash A/c				75,000
	(Half of the goodwill withdrawn by A and B)

Calculation of Sacrificing Ratio

Sacrificing Ratio =Old ratio- new ratio

	A’s	=3/5-2/7
		=11/35
	B’s	=2/5-2/7
		=4/35
			X			Y
Sacrificing Ratio =			11/35	:		4/35
=			11	:		4

Working Notes-

WN1

Distribution of Premium for Goodwill

A will get =1,50,000×11/35=1,10,000

B will get 1,50,000×4/35=40,000

WN2

Amount of Premium for Goodwill withdrawn

A will get =1,10,000×1/2=55,000

B will get =40,000×1/2=20,000