Q.No.21 | Chapter 6 – Retirement/Death of a Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 21 Chapter 6 of +2-A

21. A, B, C and D are partners in firm sharing profits, in the ratio of 2: 1 : 2: 1. On the retirement of C, Goodwill was valued 1,80,000. A B and D decide to share future profits equally. Pass the necessary journal entry for the treatment of goodwill.

The solution of Question 21 Chapter 6 of +2-A: -

 

Date	Particulars		L.F.	Debit	Credit
	B’s Capital A/c	Dr		30,000
	D’s Capital A/c	Dr		30,000
	To N’s Capital A/c				60,000
	(Being Adjustment of C′s share of goodwill)

Working Note: -

i. Calculation of B’s share of goodwill

A :B :C :D = 2:1:2:1(Old ratio)
A :B :C :D = 2:1:2:1(Old ratio)

ii Gaining Ratio

 

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

 

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

 

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

A:B:D = 0: 1: 1

Calculation of Retiring Partner’s Share of Goodwill

C's share of goodwill	=	1,80,000	X	2
				6
	=	Rs 60,000

C's share of goodwill will be brought by B and D in their gaining ratio1:1

Therefore, B’s and D’s Capital will be debited with	=	60,000	X	2
				6
	=	Rs 30,000

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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