Volume-1 | Chapter-5 | Question: 26 to 30| Admission Of A Partner | Ts grewal solution 2020-21 | Class-12th

Question 26:

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit C into partnership for 1/5th share. C brings    ` 30,000 as capital and    ` 10,000 as goodwill. At the time of admission of C, goodwill appeared in the Balance Sheet of A and B at    ` 3,000. New profit-sharing ratio of the partners will be 5 : 3 : 2. Pass necessary Journal entries.

 Journal Entries Date Particulars L.F. Debit Amount    ` Credit Amount    ` A’s Capital A/c Dr. 1,800 B’s Capital A/c Dr. 1,200 To Goodwill A/c 3,000 (Goodwill written-off) Cash A/c Dr. 40,000 To C’s Capital A/c Dr. 30,000 To Premium for Goodwill A/c 10,000 (C brought capital and his share of goodwill in cash) Premium for Goodwill Dr. 10,000 To A’s Capital A/c 5,000 To B’s Capital A/c 5,000 (Premium for Goodwill distributed)

 A B C OLD RATION 3  : 2  : 1 NEW RATIO 5  : 3  : 2  :

Sacrificing Ratio = Old Ratio − New Ratio

 A’s =3/5-5/10 =1/10 B’s =2/5-3/10 =1/10 X Y Sacrificing Ratio = 1/10 : 1/10 = 1 : 1

Distribution of Premium for Goodwill C’s share of Goodwill)

A and B each will get =10,000×1/2=5,000

Goodwill written-off

A’s capital will be debited =3,000×3/5=1,800

B’s capital will be crebited =3,000×2/5=1,200

Question 27:

Anu and Bhagwan were partners in a firm sharing profits in the ratio of 3 : 1. Goodwill appeared in the books at    ` 4,40,000. Raja was admitted to the partnership. The new profit-sharing ratio among Anu, Bhagwan and Raja was 2 : 2 : 1.
Raja brought    ` 1,00,000 for his capital and necessary cash for his goodwill premium. Goodwill of the firm was valued at    ` 2,50,000.
Record necessary Journal entries in the books of the firm for the above transactions.

 Journal Date Particulars L.F. Debit Amount  ` Credit Amount  ` Anu’s Capital A/c Dr. 3,30,000 Bhagwan’s Capital A/c Dr. 1,10,000 To Goodwill A/c 4,40,000 (Old goodwill written off in old ratio) Cash A/c Dr. 1,50,000 To Raja’s Capital A/c 1,00,000 To Premium for Goodwill A/c 50,000 (Capital and goodwill brought in by Raju) Premium for Goodwill A/c Dr. 50,000 Bhagwan’s Capital A/c 320×2,50,000 Dr. 37,500 To Anu’s Capital A/c 720×2,50,000 87,500 (Premium for goodwill adjusted)

Working Notes:

WN1 Calculation of Share in Old Goodwill

Anu's share=4,40,000×34=3,30,000

Bhagwan's share=4,40,000×14=1,10,000

WN2 Calculation of Raja's Share of Goodwill

Raja's Share of Goodwill=Firm's Goodwill×Raja's Profit Share

=2,50,000×15=50,000

WN3 Calculation of Sacrificing Ratio

Sacrificing Ratio=Old Share-New Share

Anu's=34-25=720(sacrifice)

Bhagwan's=14-25=-320(gain)

Question 28:

X and Y are partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2019, they admit Z as a partner for 1/4th share in the profits. Z contributed following assets towards his capital and for his share of goodwill:
Stock
` 60,000; Debtors    ` 80,000; Land    ` 1,00,000, Plant and Machinery    ` 40,000.
On the date of admission of Z, the goodwill of the firm was valued at
` 6,00,000.
Pass necessary Journal entries in the books of the firm on Z's admission.

 Journal Date Particulars L.F. Debit Amount  ` Credit Amount  ` 2019 April 1 Stock A/c Dr. 60,000 Debtors A/c Dr. 80,000 Land A/c Dr. 1,00,000 Plant and Machinery A/c Dr. 40,000 To Z’s Capital A/c 1,30,000 To Premium for Goodwill A/c 1,50,000 (Z brought assets for his share of goodwill and Capital) April 1 Premium for Goodwill A/c Dr. 1,50,000 To X’s Capital A/c 90,000 To Y’s Capital A/c 60,000 (Z’s share of Goodwill distributed between X and Y in sacrificing ratio)

Working Notes:

WN1

Z’s share of goodwill=6,00,000×1/4=1,50,000

WN2

Distribution of Z’s Goodwill

X will get =1,50,000×3/5=90,000

Y will get =1,50,000×2/5=60,000

Question 29:

A and B are partners in a business sharing profits and losses in the ratio of 1/3rd and 2/3rd. On 1st April, 2019, 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.

 Journal Date Particulars L.F. Debit Amount  ` Credit Amount  ` 2019 April 1 Cash A/c Dr. 14,000 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 Premium for Goodwill A/c Dr. 6,000 To A’s Capital A/c 2,000 To B’s Capital A/c 4,000 (C’s share of goodwill distributed between A and B in sacrificing ratio i.e. 1:2) 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

=1-1/4

=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

A will get =6,000×1/3=2,000

B will get =6,000×2/3=4,000

Question 30:

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 profit-sharing 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.

 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 =3/5-2/7 =11/35 B’s =2/5-2/7 =4/35 X Y Sacrificing Ratio = 11/35 : 4/35 = 11 : 4

Working Notes-

WN1

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