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

Commerce Accountancy Chapter 5 - Admission Of A Partner

Page No 5.89:

Question 36:

A, B and C are in partnership sharing profits and losses in the ratio of 5 : 4 : 1 respectively. Two new partners D and E are admitted. The profits are now to be shared in the ratio of 3 : 4 : 2 : 2 : 1 respectively. D is to pay ` 90,000 for his share of Goodwill but E has insufficient cash to pay for Goodwill. Both the new partners introduced ` 1,20,000 each as their capital. You are required to pass necessary Journal entries.

Answer:

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

	Bank A/c	Dr		3,30,000
	To D’s Capital A/c				1,20,000
	To E’s Capital A/c				1,20,000
	To Premium for Goodwill A/c				90,000
	(Capital and Goodwill brought in cash)

	C’s Capital A/c	Dr.		36,000
	E’s Capital A/c	Dr.		45,000
	Premium for Goodwill A/c	Dr.		90,000
	To A’s Capital A/c				1,35,000
	To B’s Capital A/c				36,000
	(Goodwill adjusted)

Working Notes:

WN1: Calculation of Sacrificing Ratio

A :B :C=5:4:1 (Old Ratio)

A :B :C :D :E=3:4:2:2:1 (New Ratio)

Sacrificing (or Gaining) Ratio = Old Ratio - New share

=510−312=30−1560=1560 (Share of sacrifice)

B's share =4/10−4/12=24−20/60=4/60 (Share of sacrifice)

C's share =1/10−2/12=6−10/60=−4/60 (Share of gain)

WN2: Adjustment of Goodwill
D's share in goodwill for 2/12th share=90,000

∴Total goodwill of the firm = 90,000×12/2= ` 5,40,000

E's share in goodwill = 5,40,000×1/12= ` 45,000

C's share in goodwill = 5,40,000×4/60= ` 36,000

Page No 5.90:

Question 37:

A and B are partners in a firm with capital of ` 60,000 and ` 1,20,000 respectively. They decide to admit C into the partnership for 1/4th share in the future profits. C is to bring in a sum of ` 70,000 as his capital. Calculate amount of goodwill.

Answer:

Actual Capital of the firm after admission of C = A’s Capital + B’s Capital + C’s Capital

= 60,000 + 1, 20,000 + 70,000 = ` 2, 50,000

Capitalised value of the firm on the basis C’s share= 70,000×4/1=2,80,000

Goodwill= Capitalised value of the firm – actual capital of the firm

=2,80,000-2,50,000

=30,000

Page No 5.90:

Question 38:

Anil and Sunil are partners in a firm with fixed capitals of ` 3,20,000 and ` 2,40,000 respectively. They admitted Charu as a new partner for 1/4th share in the profits of the firm on 1st April, 2012. Charu brought ` 3,20,000 as her share of capital.
Calculate value of goodwill and record necessary Journal entries.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount `	Credit Amount `
	Bank A/c	Dr.		3,20,000
	To Charu’s Capital A/c				3,20,000
	(Capital brought in by Charu)

	Charu’s Current A/c	Dr.		1,00,000
	To Anil’s Current A/c				50,000
	To Sunil’s Current A/c				50,000
	(Charu’s share of goodwill adjusted through current accounts)

Working Notes: Calculation of Hidden Goodwill

Total capital of the firm on the basis od Charu’s capital=3,20,000×4/1=	12,80,000
Less- adjusted cpital of partners + new partner’s capital=	(8,80,000)
	4,00,000

Charu’s share of goodwill=4,00,000×1/4=1,00,000

Page No 5.90:

Question 39:

Bhuwan and Shivam were partners in a firm sharing profits in the ratio of 3 : 2. Their capitals were ` 50,000 and ` 75,000 respectively. They admitted Atul on 1st April, 2021 as a new partner for 1/4th share in future profits. Atul brought ` 75,000 as his capital. Calculate the value of goodwill of the firm and record necessary Journal entries for the above transactions on Atul's admission.

Answer:

The journal entries are as follows:

Journal
Date 2021	Particulars		L.F.	Debit Amount `	Credit Amount `

April 1	Bank/Cash A/c	Dr.		75,000
	To Atul’s Capital A/c				75,000
	(for capital brought on Atul’s admission)

April 1	Atul’s Capital A/c	Dr.		25,000
	To Bhuwan’s Capital A/c				15,000
	To Shivam’s Capital A/c				10,000
	(for goodwill distributed in sacrificing ratio of 3:2)

Here, Atul is entered into partnership for 1/4^th share in future profits. He contributes ` 75,000 towards his share of capital.

Taking Atul’s capital as the base, we can calculate the firm’s capital as
Firm's Capital = New Partner's Capital × Reciprocal of his share
i.ech = 75,000 × 4 =   ` 3,00,000
However, the total capital as at that date is   ` 2,00,000 (i.e. 50,000 + 75,000 + 75,000)
So, the difference of 1,00,000 is hidden goodwill.
Atul’s share in goodwill = 1/4^th of 1,00,000 =   ` 25,000

Note: In this case, as no information is provided for the share sacrificed by the old partners, so it is assumed that the old partners are sacrificing in their old profit share.

Page No 5.90:

Question 40:

X and Y are partners with capitals of ` 50,000 each. They admit Z as a partner for 1/4th share in the profits of the firm. Z brings in ` 80,000 as his share of capital. The Profit and Loss Account showed a credit balance of ` 40,000 as on date of admission of Z.
Give necessary journal entries to record the goodwill.