Volume-1 | Chapter-5 | Question: 36 to 40 | Admission Of A Partner | Ts grewal solution 2020-21 | Class-12th

Page No 5.89:

Question 36:

Madan and Gopal are partners sharing profits in the ratio of 3 : 2. They admit Sooraj for 1/3rd share in profits on 1st April, 2019. They also decide to share future profits equally. Goodwill of the firm was valued at  ` 5,50,000. Goodwill existed in the books of account at `1,00,000,  which the partners decide to carry forward.
Sooraj is unable to bring his share of goodwill. Pass the necessary Journal entries on admission of Sooraj, if:
(a) Goodwill is not to be raised and written off; and
  (b) Goodwill is to be raised and written off.

Answer:

Particulars

Madan

Gopal

Old Ratio

3/5

2/5

New Ratio

1/3

1/3

Gain/Sacrifice

(3/5 – 1/3)= 4/15 (Sacrifice)

(2/5 – 1/3)= 1/15 (Sacrifice)

Sacrificing Ratio

4:1


Case a) Goodwill is not be raised and written off:
 

In the books of the Madan, Gopal and Sooraj

Journal

Date

Particulars

 

L.F.

Debit
Amount

 `

Credit
Amount

 `

2019

 

 

 

 

 

April 01

Sooraj’s Capital A/c (4,50,000 × 1/3)

Dr.

 

1,50,000

 

 

  To Madan’s Capital A/c (1,50,000× 4/5)

 

 

 

1,20,000

 

  To Gopal’s Capital A/c (1,50,000× 1/5)

 

 

 

30,000

 

(Being adjustment for goodwill not brought by the partner)

 

 

 

 


Case b) Goodwill is to be raised and written off:
 

In the books of the Madan, Gopal and Sooraj

Journal

Date

Particulars

 

L.F.

Debit Amount

 `

Credit Amount

 `

2019

Goodwill A/c

Dr.

 

4,50,000

 

April 01

  To Madan’s Capital A/c (4,50,000 × 3/5)

 

 

 

2,70,000

 

  To Gopal’s Capital A/c (4,50,000 × 2/5)

 

 

 

1,80,000

 

(Being goodwill raised in the books of accounts)

 

 

 

 

2019

 

 

 

 

 

April 01

Sooraj’s Capital A/c (4,50,000 × 1/3)

Dr.

 

1,50,000

 

 

 Madan’s Capital A/c (4,50,000 × 1/3)

 

 

1,50,000

 

 

 Gopal’s Capital A/c (4,50,000 × 1/3)

 

 

1,50,000

 

 

   To Goodwill A/c

 

 

 

4,50,000

 

(Being adjustment for goodwill not brought by the partner)

 

 

 

 

Page No 5.89:

Question 37:

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 5.89:

Question 38:

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 5.89:

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, 2018 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
2018

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 1/4th 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 = 1/4th 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:

Vinay and Naman are partners sharing profits in the ratio of 4 : 1. Their capitals were    ` 90,000 and    ` 70,000 respectively. They admitted Prateek for 1/3 share in the profits. Prateek brought      ` 1,00,000 as his capital. Calculate the value of firm's goodwill.

Answer:

Prateek’s capital=1,00,000

Capitalised value of the firm=(prateek’s capital× reciprocal of Prateek’s share of profit)=1,00,000×3=3,00,000

Net worth of the firm=total capital of the partner(Including the new partner)=90,000+70,000+1,00,000=2,60,000

Hidden goodwill =( Capitalised value of the firm- Net worth of the firm)=3,00,000-2,60,000=40,000
Thus, Value of firm's Goodwill is  
 `40,000.

 


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Chapter-5: Admission Of A Partner 2020

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