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 ` |
Credit ` |
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 |
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.