Page No 6.56:
Question 16:
A, B and C are
partners sharing profits in the ratio of 3 : 2 : 1. B retired and the
new profit-sharing ratio between A and C was 2 : 1. On B's
retirement, the goodwill of the firm was valued at ` 90,000. Pass necessary Journal
entry for the treatment of goodwill on B's retirement.
Answer:
Journal |
||||
Particulars |
L.F. |
Debit Amount ` |
Credit Amount ` |
|
A’s Capital A/c |
Dr. |
|
15,000 |
|
C’s Capital A/c |
Dr. |
|
15,000 |
|
To B’s
Capital A/s |
|
|
30,000 |
|
(Being Adjustment B’s share of
goodwill made) |
|
|
|
Working Notes:
WN 1 Calculation of Gaining Ratio
Old Ratio (A, B and C) = 3 : 2 : 1
B retires from the firm.
New Ratio (A and C) = 2 : 1
Gaining Ratio=New Ratio −
Old Ratio
A‘s share=2/3 -3/6 =4-3/6=1/6
B‘s share= 1/3 -1/6
=2-1/6=1/6
∴Gaining Ratio = 1 : 1
WN 2 Adjustment of Goodwill
Goodwill of the firm = `
90,000
B’s share of goodwill =90,000×2/3=30,000
This share of goodwill is to be debited to remaining Partners’ Capital
Accounts in their gaining ratio (i.e. 1 : 1).
A’s
and C’s capital will be debited =30,000×1/2=15000
Page No
6.57:
Question 17: Aman, Bimal and
Deepak are partners sharing profits in the ratio of 2: 3: 5. The goodwill of
the firm has been valued at `37,500. Aman retired. Bimal
and Deepak decided to share profits equally in future.
Calculate gain/sacrifice of Bimal and Deepak on Aman's retirement and
also pass necessary Journal entry for the treatment of goodwill. (CBSE 2019)
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount ( `) |
Credit Amount ( `) |
|
Bimal’s capital a/c |
Dr. |
7,500 |
|||
|
To Amal’s capital
a/c |
7,500 |
|||
|
(Being Goodwill adjusted) |
||||
|
|
|
|
|
|
Working notes;
WN1-
Calculation of gaining and sacrificing ratio
|
Amal
|
Bimal
|
Deepak
|
Old ratio
|
2 :
|
3 :
|
5
|
New ratio
|
Retires
|
1 :
|
1
|
Bimal = 3/10-1/2=3-5/10= -2/10
Deepak =5/10-1/2=5-5/10= 0/10
Gaining ratio of Sunil and David=13:11
WN2-
Firms goodwill =37,500
Share of retiring partner Amal is 2/10
Share of Amal share =37,500×2/10=7,500
Bimal will compensate 7,500
Page No 6.57:
Question 18:
Hanny, Pammy and Sunny are partners sharing profits in the ratio of 3 :
2 : 1. Goodwill is appearing in the books at a value of ` 60,000. Pammy retires and at the time of
Pammy's retirement, goodwill is valued at ` 84,000. Hanny and Sunny decided to share future
profits in the ratio of 2 : 1. Record the necessary Journal entries.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount ( `) |
Credit Amount ( `) |
|
|
Hanny’s Capital A/c |
Dr. |
|
30,000 |
|
|
Pammy’s Capital A/c |
Dr. |
|
20,000 |
|
|
Sunny’s Capital A/c |
|
|
10,000 |
|
|
To Goodwill
A/c |
|
|
|
60,000 |
|
(Being Old goodwill written-off in old ratio) |
|
|
|
|
|
|
|
|
|
|
|
Hanny’s Capital A/c |
Dr. |
|
14,000 |
|
|
Sunny’s Capital A/c |
Dr. |
|
14,000 |
|
|
To Pammy’s
Capital A/c |
|
|
|
28,000 |
|
(Being Adjustment for goodwill in gaining ratio) |
|
|
|
|
Working Notes:
WN1: Calculation of Pammy’s
Share in Goodwill
Pammy's share=Firm's Goodwill×Pammy's Profit SharePammy's share
=84,000×26=28,000 to be borne by gaining partners in gaining ratio
WN2: Calculation of Gaining
Ratio
Gaining Ratio = New Ratio − Old Ratio
Hanny's gain=2/3−3/6=1/6
Sunny's gain=1/3−1/6=1/6
Gaining Ratio=1:1
Page No 6.57:
Question 19:
A, B and C are
partners sharing profits in the ratio of 4/9 : 3/9 : 2/9. B retires
and his capital after making adjustments for reserves and gain (profit) on
revaluation stands at `
1,39,200. A and C agreed to pay him ` 1,50,000 in full settlement of his
claim. Record necessary Journal entry for adjustment of goodwill if the new
profit-sharing ratio is decided at 5 : 3.
Answer:
Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount ` |
Credit
Amount ` |
||
|
A’s Capital A/c |
Dr. |
|
5,850 |
|
|
|
C’s Capital A/c |
Dr. |
|
4,950 |
|
|
|
To B’s Capital A/c |
|
|
|
10,800 |
|
|
(Being Adjustment of B’s share of goodwill) |
|
|
|
|
|
Working Notes
i. Calculation of B’s share of goodwill
A, B and C are sharing profits in ratio 4/9 : 3/9 : 2/9
B retires from the firm. Remaining partners agreed to pay him ` 1,50,000
B’s capital after making necessary adjustments ` 1,39,200
Therefore, Hidden Goodwill is `
(1,50,000 – 1,39,200) i.e. `
10,800
ii Gaining Ratio
New profit sharing ratio between A and B is 5:3
A's Gain=5/8-5/9=13/72
C's Gain=3/8-2/9=11/72
gaining
ratio 13:11
Thus, B’s share of goodwill will be brought in by A and C in
the gaining ratio 13:11 i.e.
A’s capital will be debited
=10,800×13/24=5850
C’s capital will be debited =10,800×11/24=4950
Page No 6.57:
Question 20:
M,
N and O are partners in a firm sharing profits in
the ratio of 3 : 2 : 1. Goodwill has been valued at ` 60,000. On N's retirement, M and O
agree to share profits equally. Pass the necessary Journal entry for treatment
of N's share of goodwill.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (`) |
Credit Amount (`) |
|
|
|
|
|
|
|
|
O’s Capital A/c |
Dr. |
|
20,000 |
|
|
To N’s Capital A/c |
|
|
|
20,000 |
|
(Being Adjustment of N’s share of goodwill) |
|
|
|
|
|
|
|
|
|
Working Notes:
WN1:Calculation of Gaining Ratio
M :N :O=3:2:1(Old ratio)
M :O =1:1(New ratio)
Gaining Ratio = New Ratio - Old Ratio
M's Gain =1/2−3/6=3−3/6=0
O's Gain=1/2−1/6=3−1/6=2/6
WN2: Calculation of Retiring Partner’s Share of Goodwill
N's share of goodwill=60,000×2/6=` 20,000
N's share of goodwill will be brought by O only.
Therefore, O's Capital A/c will be debited with ` 20,000
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Chapter-6: Retirement of a partner | 2021-2022
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