# Volume-1 | Chapter-5 | Question: 41 to 45 | Admission Of A Partner | Ts grewal solution 2020-21 | Class-12th

#### Question 41:

X and Y are partners with capitals of    ` 50,000 each. They admit Z as a partner for 1/4th share in the profits of the firm. Z brings in    ` 80,000 as his share of capital. The Profit and Loss Account showed a credit balance of    ` 40,000 as on date of admission of Z.
Give necessary journal entries to record the goodwill.

Total Capital of the firm after Z’s admission = X’s Capital + Y’s Capital + undistributed Profit +

Z’s Capital

= 50,000 + 50,000 + 40,000 + 80,000

=    ` 2,20,000

Capitalised value of the firm on the basis Z’s share= 80,000×4/1=3,20,000

Goodwill= Capitalised value of the firm – T  otal captial after z’s admission

=3,20,000-2,20,000=1,00,000

#### Question 42:

Asin and Shreyas are partners in a firm. They admit Ajay as a new partner with 1/5th share in the profits of the firm. Ajay brings    ` 5,00,000 as his share of capital. The value of the total assets of the firm was    ` 15,00,000 and outside liabilities were valued at    ` 5,00,000 on that date. Give necessary Journal entry to record goodwill at the time of Ajay's admission. Also show your workings.

 Journal Date Particulars L.F. Debit Amount    ` Credit Amount    ` Ajay’s Capital A/c Dr. 2,00,000 To Asin’s Capital A/c 1,00,000 To Shreya’s Capital A/c 1,00,000 (Ajay’s share of goodwill distributed among the old partners in their sacrificing ratio 1:1.)

Working Notes:

Calculation of Goodwill brought in by Ajay

 Value of firm’s goodwill = Capitalised value of the firm – Net worth Capitalised value of the firm = Share of Ajay's capital × Reciprocal of Ajay's share = 5,00,000 ×51=   ` 25,00,000 Net worth of the new firm = Total assets-Outside liabilities + Ajay's capital = 15,00,000 - 5,00,000 + 5,00,000=    ` 15,00,000 Value of firm's goodwill = Capitalised value of firm - Net worth of the new firm =25,00,000 - 15,00,000  =    ` 10,00,000 Ajay's share of goodwill = 10,00,000 × 1/5 =   ` 2,00,000

#### Question 43:

Verma and Sharma are partners in a firm sharing profits and losses in the ratio of 5 : 3. They admitted Ghosh as a new partner for 1/5th share of profits. Ghosh is to bring in    ` 20,000 as capital and    ` 4,000 as his share of goodwill premium. Give the necessary Journal entries:
(a) When the amount of goodwill is retained in the business.
(b) When the amount of goodwill is fully withdrawn.
(c) When 50% of the amount of goodwill is withdrawn.
(d) When goodwill is paid privately.

 Journal Entries S.No. Particulars L.F. Debit Amount    ` Credit Amount    ` Case (a) Cash A/c Dr. 24,000 To Ghosh's Capital A/c 20,000 To Premium for Goodwill A/c 4,000 (Capital and Goodwill his share broughtby Ghosh) Premium for Godwill A/c Dr. 4,000 To Verma's Capital A/c 2,500 To Sharma's Capital A/c 1,500 (Goodwill brought by Ghosh credited to Old Partnersin Sacrificing ratio) Case (b) Cash A/c Dr. 24,000 To Ghosh Capital A/c 20,000 To Premium for Goodwill A/c 4,000 (Capital and Goodwill brought by Ghosh for (1/5)share of profit) Premium for Goodwill A/c Dr. 4,000 To Verma's Capital A/c 2,500 To Sharma's Capital A/c 1,500 (Goodwill brought by Ghosh credited in Old Partner in Sacrificing Ratio) Verma's Capital A/c Dr. 2,500 Sharma's Capital A/c Dr. 1,500 To Cash A/c 4,000 (Amount of Premium for Goodwill withdrawn byOld Partners) Case (c) Cash A/c Dr. 24,000 To Ghosh's Capital A/c 20,000 To Premium for Goodwill A/c 4,000 (Capital and Goodwill brought by Ghosh for (1/5)share of profit) Premium for Goodwill A/c Dr. 4,000 To Verma's Capital A/c 2,500 To Sharma's Capital A/c 1,500 (Premium for Goodwill credited to Old Partner's Capital Account in sacrificing ratio) Verma's Capital A/c Dr. 1,250 Sharma's Capital A/c 750 To Cash A/c 2,000 (Half of the amount of premium for goodwill withdrawn by Old partners) Case (d) No entry: Goodwill was not brought into firm

#### Question 44:

Disha and Divya are partners in a firm sharing profits in the ratio of 3 : 2 respectively. The fixed capital of Disha is ` 4,80,000 and of Divya is ` 3,00,000. On 1st April, 2019 they admitted Hina as a new partner for 1/5th share in future profits. Hina brought ` 3,00,000 as her capital. Calculate value of goodwill of the firm and record necessary Journal entries on Hina's admission.

 Journal Date Particulars L.F. Debit Amount  ` Credit Amount  ` 2019 April 1 Bank A/c Dr. 3,00,000 To Hina’s Capital A/c 3,00,000 (Capital brought in by Hina) April 1 Hina’s Current A/c Dr. 84,000 To Disha’s Current A/c 50,400 To Divya’s Current A/c 33,600 (Hina’s Share of Goodwill adjusted through current accounts)

Working Note:

Calculation of Hidden Goodwill

 Total capital of the firm on the basis of Hina’s capital=(3,00,000×5/1)= 15,00,000 Less- adjusted cpital of partners + new partner’s capital= (10,80,000) 4,20,000

Hina’s share of goodwill=4,20,000×1/5=84,000

#### Question 45:

E and F were partners in a firm sharing profits in the ratio of 3 : 1. They admitted G as a new partner on 1st April, 2019 for 1/3rd share. It was decided that E, F and G will share future profits equally. G brought    ` 50,000 in cash and machinery valued at    ` 70,000 as premium for goodwill.
Pass necessary Journal entries in the books of the firm.

 Journal Date Particulars L.F. Debit Amount  ` Credit Amount  ` 2019 April 1 Cash A/c Dr. 50,000 Machinery A/c Dr. 70,000 To Premium for Goodwill A/c 1,20,000 (G brought cash    ` 50,000 and Machinery    ` 70,000 for his share of Goodwill) April 1 Premium for Goodwill A/c Dr. 1,20,000 To E’s Capital A/c 1,20,000 (G share of goodwill transferred to E’s Capital Account) April 1 F’s Capital A/c Dr. 30,000 To E’s Capital A/c 30,000 (F’s share of gain in goodwill charged from his capital and transferred to E’s capital)

Working Notes:

WN1

 E F G OLD RATION 3  : 1: NEW RATIO 1  : 1  : 1 :

Sacrificing Ratio =Old ratio- new ratio

 E’s =3/4-1/3 =5/12 F’s =1/4-1/3 = -1/12

WN2

Calculation of F’s share of gain in goodwill

G’s share of Goodwill = 50,000 + 70,000 =    ` 1, 20,000

Goodwill of the firm on the basis of G’s share =120000×3/1=3,60,000

F’s share of gain in goodwill =3,60,000×1/12=30,000