Volume-1 | Chapter-5 | Question: 31 to 35 | Admission Of A Partner | Ts grewal solution 2020-21 | Class-12th

Page No 5.89:

Question 31:

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 written-off)

 

 

 

 

 

 

 

 

 

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
A and B in Sacrificing Ratio)

 

 

 

 

 

 

 

 


Working Notes:

WN1 Writing-off 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 32:

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 33:

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:

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

(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
from his capital account and distributed between
Murty and Shah in sacrificing ratio i.ech 3:2)

 

 

 

 

 

 

 

 

(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 written-off at the time of Rao’s
admission in old ratio)

 

 

 

 

 

 

 

 

 

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
Capital Account and distributed between
Murty and Shah in sacrificing ratio i.ech 3:2)

 

 

 

 

 

 

 

 

 

Page No 5.89:

Question 34:

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 =410−412=24−2060=460 (Share of sacrifice)

C's share =110−212=6−1060=−460 (Share of gain)

WN2: Adjustment of Goodwill
D's share in goodwill for 212 th share=90,000

Total goodwill of the firm = 90,000×122=   ` 5,40,000

E's share in goodwill = 5,40,000×112=   ` 45,000

C's share in goodwill = 5,40,000×460=   ` 36,000

Page No 5.89:

Question 35:

Mohan and Sohan were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted Ram for 1/4th share on 1st April, 2019. It was agreed that goodwill of the firm will be valued at 3 years' purchase of the average profit of last 4 years ended 31st March, were    ` 50,000 for 2015-16,    ` 60,000 for 2016-17,    ` 90,000 for 2017-18 and    ` 70,000 for 2018-19. Ram did not bring his share of goodwill premium in cash. Record the necessary Journal entries in the books of the firm on Ram's admission when:
(a) Goodwill appears in the books at    ` 2,02,500.
(b) Goodwill appears in the books at    ` 2,500.
(c) Goodwill appears in the books at    ` 2,05,000

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

 `

Credit

Amount

 `

2019
Apr.1


Mohan’s Capital A/c


Dr.

 


1,21,500

 

 

Sohan’s Capital A/c

Dr.

 

81,000

 

 

To Goodwill A/c

 

 

 

2,02,500

 

(Old goodwill written-off in old ratio)

 

 

 

 

 

 

 

 

 

 

 

Ram’s Capital A/c

Dr.

 

50,625

 

 

To Mohan’s Capital A/c

 

 

 

30,375

 

To Sohan’s Capital A/c

 

 

 

20,250

 

(Premium not brought debited to Ram and credited to sacrificing partners)

 

 

 

 

 

 

 

 

 

 

 

Mohan’s Capital A/c

Dr.

 

1,500

 

 

Sohan’s Capital A/c

Dr.

 

1,000

 

 

To Goodwill A/c

 

 

 

2,500

 

(Old goodwill written-off in old ratio)

 

 

 

 

 

 

 

 

 

 

 

Ram’s Capital A/c

Dr.

 

50,625

 

 

To Mohan’s Capital A/c

 

 

 

30,375

 

To Sohan’s Capital A/c

 

 

 

20,250

 

(Premium not brought debited to Ram and credited to sacrificing partners)

 

 

 

 

 

 

 

 

 

 

 

Mohan’s Capital A/c

Dr.

 

1,23,000

 

 

Sohan’s Capital A/c

Dr.

 

82,000

 

 

To Goodwill A/c

 

 

 

2,05,00

 

(Old goodwill written-off in old ratio)

 

 

 

 

 

 

 

 

 

 

 

Ram’s Capital A/c

Dr.

 

50,625

 

 

To Mohan’s Capital A/c

 

 

 

30,375

 

To Sohan’s Capital A/c

 

 

 

20,250

 

(Premium not brought debited to Ram and credited to sacrificing partners)

 

 

 

 


Working Notes:

WN1: Calculation of Goodwill

Goodwill=Average Profits×Number of Years' Purchase

Average Profits=Total ProfitsNumber of Years

=50,000+60,000+90,000+70,000/4=2,70,000/4=   ` 67,500

Goodwill=67,500×3=   ` 2,02,500

Ram's share=2,02,500×14=50,625
Note: Since no information is given about the share of sacrifice, it is assumed that the old partners are sacrificing in their old profit sharing ratio.

 


Click on Below link for more questions Of Volume-1 | 
Chapter-5: Admission Of A Partner 2020

From Question No. 1 to 5

From Question No. 6 to 10

From Question No. 11 to 15

From Question No. 16 to 20

From Question No. 21 to 25

From Question No. 26 to 30

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