Q.No.20 | Chapter 6 – Retirement/Death of a Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 20 Chapter 6 of +2-A

20. M, N and O are partners in firm sharing profits in the ratio of 3: 2: 1. Goodwill has been valued at 60,000. On N's retirement, M and O agree to share profits equally. Pass the necessary journal entry for treatment of N's share of goodwill.

The solution of Question 20 Chapter 6 of +2-A: -

 

Date	Particulars		L.F.	Debit	Credit
	O’s Capital A/c	Dr		20,000
	To N’s Capital A/c				20,000
	(Being Adjustment of B′s share of goodwill)

Working Note: -

i. Calculation of B’s share of goodwill

M :N :O = 3:2:1(Old ratio)
M :O =1:1(New ratio)

ii Gaining Ratio

 

M's Gain	=	1	-	3
		2		6
	=	3	-	3
		6
	=	0
		6

 

O's Gain	=	1	-	1
		2		6
	=	3	-	1
		6
	=	2
		6

M:O = 0: 2

Calculation of Retiring Partner’s Share of Goodwill

N's share of goodwill	=	60,000	X	2
				6
	=	Rs 20,000

N's share of goodwill will be brought by O only
Therefore, O's Capital A/c will be debited with Rs 20,000

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
• Chapter No. 3 – Goodwill: Nature and Valuation
• Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 – Admission of a Partner
• Chapter No. 6 – Retirement/Death of a Partner
• Chapter No. 7 – Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 8 – Company Accounts –  Accounting for Share Capital
• Chapter No. 9 – Company Accounts – Issue of Debentures
• Chapter No. 10 – Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 – Financial Statements of a Company
• Chapter No. 2 – Financial Statement Analysis 
• Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
• Chapter No. 4 – Accounting Ratios
• Chapter No. 5 – Cash Flow Statement

 

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