Volume-1 | Chapter-5 | Question: 16 to 20 | Admission Of A Partner | Ts grewal solution 2020-21 | Class-12th

Page No 5.87:

Question 16:

P and Q are partners sharing profits in the ratio of 3 : 2. They admit R into partnership who acquires 1/5th of his share from P and 4/25th share from Q. Calculate New Profit-sharing Ratio and Sacrificing Ratio.

Answer:

Calulation of New Profit Sharing Ratio

P:Q=3:2 (Old Ratio)

R acquires 1/5th of his share from P And,

Remaining 4/5th (1−1/5) of his share from Q.

If 4/5th share of R=4/25

R's share=4/25×54=5/25

P's sacrifice=1/5×1/5=1/25

Q's sacrifice=4/25

P's new share=3/5−1/25=1/5−1/25=14/25

Q's new share=2/5−4/25=10−4/25=6/25

R's new share=1/5×5/5=5/25

P:Q:R=14:6:5

Sacrificing Ratio=1:4

Page No 5.87:

Question 17:

Answer;

Journal

Date

Particulars

L.F.

Debit

Amount

   `

Credit

Amount

   `

 

 

 

 

 

 

Cash A/c

Dr.

 

14,000

 

 

To Premium for Goodwill A/c

 

 

 

14,000

 

(c brought Premium for Goodwill)

 

 

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

14,000

 

 

To A’s Capital A/c

 

 

 

4,000

 

To B’s Capital A/c

 

 

 

10,000

 

(Premium for Goodwill distributed

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

 

 

 

 

 

 

 

 

 


Working notes;

Old ratio of A and B =2:5

C is admitted of ¼ share in the firm

Remaining share of A and B after C’s admission =1-1/4=3/4

A’s share =3/4×2/7==6/28

B’s share =3/4×5/7==15/28

C’s share =1/4×7/7==7/28

New profit sharing ratio of A, B and C=6:15:7

Sacrificing ratio= Old – new

A=2/7- 6/28=8-6/28=2/28

B=5/7-15/28=20-15/28=5/28

Sacrificing ratio of A:B=2:5

 

Page No 5.87:

Question 18:

A and B are partners sharing profits and losses in the ratio of 2 : 5. They admit C on the condition that he will bring    ` 14,000 as his share of goodwill to be distributed between A and B. C's share in the future profits or losses will be 1/4th. What will be the new profit-sharing ratio and what amount of goodwill brought in by will be received by A and B

Answer:

 

A

B

OLD RATION

2  :

5 

C is admitted for 1/4share

Let the combined share of A, B and C be = 1

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

=1-1/4

=3/4

New Ratio = Old Ratio  Combined share of A and B

A’s

=2/7×3/4

 

=6/28

B’s

=5/7×3/4

 

=15/28

New profit sharing ratio=

A

 

B

 

C

6/28

:

15/28

:

1/4      

6/28

:

15/28

:

7/28           

6       

:

15

:

7       

Distribution of C’s share of Goodwill

C’s share of Goodwill =    ` 14,000

A will get =14,000×2/7=4,000

B will get =14,000×5/7=10,000

 

Page No 5.87:

Question 19:

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 20:

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 brough by D × reciprocal of D’s share

=15,000×3/1=45,000

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

=45,000×1/12=3,750