Double
Entry Book Keeping Ts Grewal Volume I 20212022
Solutions for Class 12
Commerce
Accountancy Chapter 5  Admission Of A Partner
Page No 5.89:
Question 31:
A and B are partners in a business sharing profits and
losses in the ratio of 1/3rd and 2/3rd. On 1st April, 2020, 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 The amount of goodwill is withdrawn by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. Draft the journal entries and show the Capital
Accounts of all the Partners. Calculate proportion in which partners would share
profits and losses in future.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit Amount ` 
Credit Amount ` 

2020 





April 1 






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 






To A’s Capital A/c 


2,000 


To B’s Capital A/c 


4,000 


(C’s share of
goodwill distributed between 











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(Amount of goodwill withdrawn by A and B) 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
=11/4
=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
Page No 5.89:
Question 32:
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 profitsharing 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premium was withdrawn by A and B from the firm.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 Amount ` 
Credit Amount ` 








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 
=3/52/7 




=11/35 



B’s 
=2/52/7 




=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
Page No 5.89:
Question 33:
A and B are
partners sharing profits in the ratio of 2 : 1. They
admit C for 1/4th share in profits. C brings
in ` 30,000 for his capital and ` 8,000 out of his share of
` 10,000 for
goodwill. Before admission, goodwill appeared in books at ` 18,000. Give Journal entries to give effect to the above
arrangement.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit Amount ` 
Credit Amount ` 








A’s Capital A/c 
Dr. 

12,000 


B’s Capital A/c 
Dr. 

6,000 


To Goodwill A/c 


18,000 


(Goodwill writtenoff) 











Cash A/c 
Dr. 

38,000 


To C’s Capital A/c 


30,000 


To Premium for Goodwill 


8,000 


(C brought Capital and goodwill) 











Premium for Goodwill A/c 
Dr. 

8,000 


C’s Capital A/c 
Dr. 

2,000 


To A’s Capital A/c 


6,667 


To B’s Capital 


3,333 


(C’s share of
goodwill distributed between 









Working Notes:
WN1 Writingoff of Goodwill
A’s Capital Account will be debited by =18,000×2/3=12,000
B’s Capital Account will be debited by =18,000×1/3=6,000
WN2 Distribution of C’s share of Goodwill
A will get =10,000×2/3=6,667
B will get =10,000×1/3=3.333
Page No 5.89:
Question 34:
A and B are
partners sharing profits and losses in the ratio of 3 :
2. They admit C as partner in the firm for 1/4th share in profits
which he takes 1/6th from A and 1/12th from B. C
brings in only 60% of his share of firm's goodwill. Goodwill of the firm has
been valued at ` 1,00,000. Pass necessary journal
entries to record this arrangement.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit Amount ` 
Credit Amount ` 








Bank A/c 
Dr. 

15,000 


To Premium for Goodwill A/c 



15,000 

(Goodwill brought in cash) 











Premium for Goodwill A/c 
Dr. 

15,000 


To A’s Capital A/c 



10,000 

To B’s Capital A/c 



5,000 

(Goodwill distributed between A & B in sacrificing ratio) 











C’s Capital A/c 
Dr 

10,000 


To A’s Capital A/c 



6,667 

To B’s Capital A/c 



3,333 

(Goodwill adjusted) 









Working Notes:
WN1: Calculation of Sacrificing Ratio
A's sacrifice =16×22=212
B's sacrifice =112
∴ Sacrificing Ratio between A and B = 2:1
WN2: Calculation of share in goodwill of new partner
C's share in goodwill=1,00,000×14= ` 25,000
Goodwill brought in cash ` 15,000(25,000×60%)
Remaining goodwill of ` 10,000 will be adjusted through C's Capital A/c
Page No 5.89:
Question 35:
On the admission
of Rao, goodwill of Murty and Shah is valued
at ` 30,000. Rao is to get 1/4th share of profits. Previously Murty and Shah shared profits in the ratio of 3 : 2. Rao is unable to bring amount of goodwill. Give
Journal entries in the books of Murty and Shah when:
(a) there is no Goodwill Account and
(b) Goodwill appears in the books at
` 10,000.
Answer:
(a) Where there is no Goodwill Account
Journal 

Date 
Particulars 
L.F. 
Debit Amount ` 
Credit Amount ` 








Rao’s Capital A/c 
Dr. 

7,500 


To Murty’s Capital A/c 


4,500 


To Shah’s Capital A/c 


3,000 


(Rao’s share of
goodwill charged 










(b) Goodwill appears at ` 10,000
Journal 

Date 
Particulars 
L.F. 
Debit Amount ` 
Credit Amount ` 








Murty’s Capital A/c 
Dr. 

6,000 


Shah’s Capital A/c 
Dr. 

4,000 


To Goodwill A/c 


10,000 


(Goodwill
writtenoff at the time of Rao’s 











Rao’s Capital A/c 
Dr. 

7,500 


To Murty’s Capital A/c 


4,500 


To Shah’s Capital A/c 


3,000 


(Rao’s share of
goodwill charged from his 









Working
Notes;
WN1: Calculation of Rao’s share of Goodwill
Rao’s share of goodwill=30,000×1/4=7,500
WN2: Adjustment of Rao’s share of Goodwill
Murty will get =7,500×3/5=4,500
Shah will get =7,500×2/5=3,000
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