Q.No.25 | Chapter 5 – Admission of Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 25 Chapter 5 of +2-A

25. A and B are in partnership sharing profits and losses in the ratio of 5 : 3. C is admitted as a partner who pays 40,000 as capital and the necessary amount of goodwill which is valued at 60,000 for the firm. His share of profits will be 1/5th which he takes 1/10th from A and 1/10th from B.
Give Journal entries and also calculate future profit-sharing ratio of the partners.

 

The solution of Question 25 Chapter 6 of +2-A

Date	Particulars		L.F.	Debit	Credit
	Cash A/c	Dr		52,000
	To C’s Capital A/c				40,000
	To Premium for Goodwill A/c				12,000
	(Being C brought his share of goodwill)
	Premium for Goodwill A/c	Dr		12,000
	To A’s Capital A/c				6,000
	To B’s Capital A/c				6,000
	(Being goodwill distributed among the old partners’ in their sacrificing ratio)

Working Note: -

Old Ratio of A and B	=	5 : 3
Sacrificing Ratio of A and B	=	1/10 : 1/10

New Share = Old Ratio - Sacrificing Ratio

A’s New Share	=	5	-	1
		8		10

=	25 - 4
	40

=	21
		40

 

B’s Sacrificing Share	=	3	-	1
		8		10

=	15 - 4
	40

=	11
		40

 

New Ratio of A, B and C	=	21	:	11	:	1
		40		40		5

=	21	:	11	:	8
	40		40		40
=	21	:	11	:	8

Distribution of C’s share of Goodwill
C’s share of Goodwill

A &B will get share of Goodwill

=

New Partner’s Share of Goodwill X Sacrificing Ratio

=	12,000	X	1
			2
=	6000 each

 

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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