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;
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Journal |
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Date |
Particulars |
L.F. |
Debit Amount ` |
Credit Amount ` |
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Cash A/c |
Dr. |
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14,000 |
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To Premium for Goodwill A/c |
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14,000 |
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(c brought Premium for Goodwill) |
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Premium for Goodwill A/c |
Dr. |
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14,000 |
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To A’s Capital A/c |
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4,000 |
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To B’s Capital A/c |
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10,000 |
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(Premium for Goodwill distributed between B and C in sacrificing ratio i.e. 3:2) |
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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 C will be received by A and B?
Answer:
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A |
B |
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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
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A’s |
=2/7×3/4 |
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=6/28 |
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B’s |
=5/7×3/4 |
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=15/28 |
New profit sharing ratio=
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A |
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B |
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C |
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6/28 |
: |
15/28 |
: |
1/4 |
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6/28 |
: |
15/28 |
: |
7/28 |
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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)
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Journal |
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Date |
Particulars |
L.F. |
Debit Amount ` |
Credit Amount ` |
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Cash A/c |
Dr. |
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2,000 |
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To Premium for Goodwill A/c |
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2,000 |
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(D brought Premium for Goodwill) |
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Premium for Goodwill A/c |
Dr. |
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2,000 |
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To B’s Capital A/c |
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1,200 |
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To C’s Capital A/c |
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800 |
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(Premium for Goodwill distributed between B and C in sacrificing ratio i.e. 3:2) |
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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)
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Journal |
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Date |
Particulars |
L.F. |
Debit Amount ` |
Credit Amount ` |
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Cash A/c |
Dr. |
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2,100 |
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To Premium for Goodwill A/c |
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2,100 |
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(D brought his share of goodwill in cash) |
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Premium for Goodwill A/c |
Dr. |
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2,100 |
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To B’s Capital A/c |
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1,400 |
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To C’s Capital A/c |
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700 |
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(Premium for Goodwill brought distributed between B and C in sacrificing Ratio i.e. 2:1) |
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Working Note:
WN1
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B |
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C |
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Sacrificing ratio = |
1/6 |
: |
1/12 |
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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:
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Journal |
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Date |
Particulars |
L.F. |
Debit Amount ` |
Credit Amount ` |
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Cash A/c |
Dr. |
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15,000 |
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To Premium for Goodwill A/c |
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15,000 |
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(D brought his share of goodwill in cash) |
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Premium for Goodwill A/c |
Dr. |
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15,000 |
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To B’s Capital A/c |
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15,000 |
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(Premium for goodwill transferred to B’s Capital) |
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C’s Capital A/c |
Dr. |
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3,750 |
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To B’s Capital A/c |
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3,750 |
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(Goodwill charged from C’s
Capital Account due |
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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
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=2/3×1/2 |
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=2/6 =1/3
each |
Sacrificing
Ratio =Old ratio- new ratio
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A’s |
=3/4-1/3 |
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=5/12 (Sacrifice) |
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B’s |
=1/4-1/3 |
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=-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