Double
Entry Book Keeping Ts Grewal Volume I 20212022 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 










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
=11/3
=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 
=3/41/3 

=5/12 (Sacrifice) 
B’s 
=1/41/3 

=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 profitsharing 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 
=3/55/10 




=1/10 



Sunita’s 
=2/53/10 




=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 profitsharing 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 
=5/81/10 




=21/40 



B’s 
=3/81/10 




=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 










Working Notes:
WN1
Calculation of Sacrificing Ratio
New
ratio= old ratio – Sacrificing Ratio
X’s 
=2/41/3 

=5/12 
Y’s 
=1/41/3 

=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
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