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

#### 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.

 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)

#### 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.

 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

#### 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.

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

#### 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.

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.

#### 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.

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.