Q.No.22 | Chapter 5 – Admission of Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 22 Chapter 5 of +2-A

22. Give Journal entries to record the following arrangements in the books of the firm:

1. B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium (goodwill) of 2,000 for 1/4th share of the profits, shares of B and C remain as before.
2. B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium of 2,100 for 1/4th share of profits which he acquires 1/6th from B and 1/12th from C.

 

The solution of Question 22 Chapter 6 of +2-A

 

Case A

Date	Particulars		L.F.	Debit	Credit
	Cash A/c	Dr		2,000
	To Premium for Goodwill A/c				2,000
	(Being C brought his share of goodwill)
	Premium for Goodwill A/c	Dr		2,000
	To B’s Capital A/c				1,200
	To C’s Capital A/c				800
	(Being goodwill distributed among the old partners’ in their sacrificing ratio)

 

Working Note: -

Distribution of C’s share of Goodwill
C’s share of Goodwill = 2,000

A’s get share of Goodwill	=	2,000	X	3
				5
	=	1,200

 

B’s get share of Goodwill	=	2,000	X	2
				5
	=	800

 

Case B

Date	Particulars		L.F.	Debit	Credit
	Cash A/c	Dr		2,100
	To Premium for Goodwill A/c				2,100
	(Being C brought his share of goodwill)
	Premium for Goodwill A/c	Dr		2,100
	To B’s Capital A/c				1,400
	To C’s Capital A/c				700
	(Being goodwill distributed among the old partners’ in their sacrificing ratio)

Working Note: -

Sacrificing Ratio of A and B	=	1	:	1
		6		12

=	2	:	1
	12		12
=	2	:	1

Distribution of C’s share of Goodwill
C’s share of Goodwill = 2,100

A’s get share of Goodwill	=	2,100	X	2
				3
	=	1,400

 

B’s get share of Goodwill	=	2,100	X	1
				3
	=	700

 

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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