12th | Ts grewal 2021-2022 Question 21 to 25 | Admission of a partner

Double Entry Book Keeping Ts Grewal Volume I 2021-2022 Solutions for Class 12

Commerce Accountancy Chapter 5 - Admission Of A Partner

 

Page No 5.87:

Question 21:

Give Journal entries to record the following arrangements in the books of the firm:
(a) B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium (goodwill) of  
 ` 2,000 for 1/4th share of the profits, shares shares of B and C remain as before.
(b) B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium of  
 ` 2,100 for 1/4th share of profits which he acquires 1/6th from B and 1/12th from C.

Answer:

(a)

Journal

Date

Particulars

L.F.

Debit

Amount

   `

Credit

Amount

   `

 

 

 

 

 

 

Cash A/c

Dr.

 

2,000

 

 

To Premium for Goodwill A/c

 

 

 

2,000

 

(D brought Premium for Goodwill)

 

 

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

2,000

 

 

To B’s Capital A/c

 

 

 

1,200

 

To C’s Capital A/c

 

 

 

800

 

(Premium for Goodwill distributed

between B and C in sacrificing ratio i.e. 3:2)

 

 

 

 

 

 

 

 

 


Working Note:

Distribution of premium for Goodwill-

B will get =2,000×3/5=1,200

A will get =2,000×2/5=800

 

(b)

Journal

Date

Particulars

L.F.

Debit

Amount

   `

Credit

Amount

   `

 

Cash A/c

Dr.

 

2,100

 

 

To Premium for Goodwill A/c

 

 

 

2,100

 

(D brought his share of goodwill in cash)

 

 

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

2,100

 

 

To B’s Capital A/c

 

 

 

1,400

 

To C’s Capital A/c

 

 

 

700

 

(Premium for Goodwill brought distributed

between B and C in sacrificing Ratio i.e. 2:1)

 

 

 

 

 

 

 

 

 


Working Note:

WN1

 

B

 

C

Sacrificing ratio =

1/6      

:

1/12

 

2

:

1

WN2

Distribution of Premium for Goodwill-

B will get =21,00×2/3=1.400

C will get =21,00×1/3=700

 



Page No 5.87:

Question 22:

B and C are in partnership sharing profits and losses as 3 : 1. They admit D into the firm, D pays premium of    ` 15,000 for 1/3rd share of the profits. As between themselves, B and C agree to share future profits and losses equally. Draft Journal entries showing appropriations of the premium money.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

   `

Credit

Amount

   `

 

 

 

 

 

 

Cash A/c

Dr.

 

15,000

 

 

To Premium for Goodwill A/c

 

 

 

15,000

 

(D brought his share of goodwill in cash)

 

 

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

15,000

 

 

To B’s Capital A/c

 

 

 

15,000

 

(Premium for goodwill transferred to B’s Capital)

 

 

 

 

 

 

 

 

 

 

C’s Capital A/c

Dr.

 

3,750

 

 

To B’s Capital A/c

 

 

 

3,750

 

(Goodwill charged from C’s Capital Account due
to his gain in profit sharing)

 

 

 

 

 

 

 

 

 


WN1

Calculation of Sacrificing Ratio:

Let combined share of all partners after D’s admission be = 1

Combined share of B and C after C’s admission be = 1

=1-1/3

=2/3

 

B and C each share of profit after D’s admission will be

=2/3×1/2

=2/6

=1/3 each

 

Sacrificing Ratio =Old ratio- new ratio

 

A’s

=3/4-1/3

 

=5/12 (Sacrifice)

B’s

=1/4-1/3

 

=-1/12(gain)

WN2

C is gaining in new the firm. Hence, C’s gain in goodwill will be debited to his capital and given to B (sacrificing partner).

Goodwill of the firm= premium of Goodwill brought by D × reciprocal of D’s share

=15,000×3/1=45,000

C’s share of gain in goodwill= goodwill of the firm × C’s share of gain

=45,000×1/12=3,750

 



Page No 5.87:

Question 23:

Geeta and Sunita are partners in a firm sharing profits in the ratio of 3 : 2. They admit Anita as a new partner. The new profit-sharing ratio between Geeta, Sunita and Anita will be 5 : 3 : 2. Anita brought in  `25,000 for his share of premium for goodwill. Pass necessary Journal entries for the treatment of goodwill.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

   `

Credit

Amount

   `

 

 

 

 

 

 

Cash A/c

Dr.

 

25,000

 

 

To Premium for Goodwill A/c

 

 

 

25,000

 

(Anita brought his share of goodwill in cash)

 

 

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

25,000

 

 

To Geeta’s Capital A/c

 

 

 

12,500

 

To Sunita’s Capital A/c

 

 

 

12,500

 

(Ania’s share of Goodwill distributed in Geeta and Sunita in their sacrificing Ratio)

 

 

 

 

 

 

 

 

 


Working Notes:

WN1

Calculating of Sacrificing Ratio

Sacrificing Ratio =Old ratio- new ratio

 

Geeta’s

=3/5-5/10

 

 

 

=1/10

 

 

Sunita’s

=2/5-3/10

 

 

 

=1/10

 

 

Geeta

 

Sunita

Sacri ficing Ratio =

1/10

:

1/10

 

1

 

1

WN2   

Distribution of Geeta’s share of Goodwill-

Geeta and Sunita each will get =25,000×1/2=12,500

 



Page No 5.87:

Question 24:

A and B are in partnership sharing profits and losses in the ratio of 5 : 3. C is admitted as a partner who pays    ` 40,000 as capital and the necessary amount of goodwill which is valued at    ` 60,000 for the firm. His share of profits will be 1/5th which he takes 1/10th from A and 1/10th from B.
Pass Journal entries and also calculate future profit-sharing ratio of the partners.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

   `

Credit

Amount

   `

 

Cash A/c

Dr.

 

52,000

 

 

To C’s Capital A/c

 

 

 

40,000

 

To Premium for Goodwill A/c

 

 

 

12,000

 

(C brought Capital and his share of goodwill in cash)

 

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

12,000

 

 

To A’s Capital A/c

 

 

 

6,000

 

To B’s Capital A/c

 

 

 

6,000

 

(C’s share of Goodwill distributed in A and B)

 

 

 

 

 

 

 

 

 


Working Notes-

WN1

 

A

 

B

Sacrificing Ratio =

1/10

:

1/10

 

1

 

1

WN2

Calculation of new profit sharing Ratio

 

A

B

OLD RATION

5  :

3

New ratio= old ratio – sacrificing ratio

 

 

A’s

=5/8-1/10

 

 

 

=21/40

 

 

B’s

=3/8-1/10

 

 

 

=11/40

 

 

X

 

Y

 

Z

New profit sharing ratio =

21/40

:

11/40

:

1/5  

=

21/40

:

11/40

:

8/40         

WN3

Distribution of C’s share of Goodwill (in Sacrificing Ratio)

A and B each will get =12,000×1/2=6,000

 



Page No 5.87:

Question 25:

X and Y are partners sharing profits in the ratio of 3: 1. Z is admitted as a partner for which he pays    ` 30,000 for goodwill in cash. X, Y and Z  decide to share the future profits equally.

Pass an adjustment Journal entry to give effect to the above arrangement.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

   `

Credit

Amount

   `

 

 

 

 

 

 

Cash A/c

Dr.

 

30,000

 

 

To Premium for Goodwill A/c

 

 

 

30,000

 

(X brought his share of goodwill)

 

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

30,000

 

 

Y’s Capital A/c

Dr.

 

7,500

 

 

To X’s Capital A/c

 

 

 

37,500

 

(Y and Z share of gain in goodwill transferred
to X’s Capital Account)

 

 

 

 

 

 

 

 

 


Working Notes:

WN1

Calculation of Sacrificing Ratio

New ratio= old ratio – Sacrificing Ratio

X’s

=2/4-1/3

 

=5/12

Y’s

=1/4-1/3

 

=-1/12

 

WN2

Goodwill of the firm on the basis of Z’s share

Share of Z = 1/3

Premium he brought for his share =30,000

So, firms’s goodwill=30,000×3/1=90,000

 

X will get as a goodwill = Z’s share of Goodwill + Y’s gain in Goodwill=30,000×3/1

=90,000

B’s  share in goodwill =90,000×1/12=7,500

= 30,000 + 7,500

=    ` 37,500