Question 30 Chapter 5 of +2-A
30. Anu and Bhagwan were partners in a firm sharing profits in the ratio of 3 : 1. Goodwill appeared in the books at 4,40,000. Raja was admitted to the partnership. The new profit-sharing ratio among Anu, Bhagwan and Raja was 2 : 2 : 1. Raja brought 1,00,000 for his capital and necessary cash for his goodwill premium. Goodwill of the firm was valued at 2,50,000.
Record necessary Journal entries in the books of the firm for the above transactions.
The solution of Question 30 Chapter 6 of +2-A
| Date | Particulars |
L.F. | Debit | Credit | |
|---|---|---|---|---|---|
| Anu’s Capital A/c | Dr | 3,30,000 | |||
| Bhagwan’s Capital A/c | Dr | 1,10,000 | |||
| To Goodwill A/c | 4,40,000 | ||||
| (Being goodwill written off which is already in the books) | |||||
| Bank A/c | Dr | 1,50,000 | |||
| To Raja’s Capital A/c | 1,00,000 | ||||
| To Premium for Goodwill A/c | 50,000 | ||||
| (Being C brought his share of capital and goodwill) | |||||
| Premium for Goodwill A/c | Dr | 50,000 | |||
| Bhagwan’s Capital A/c | Dr | 37,500 | |||
| To Anu’s Capital A/c | 87,500 | ||||
| (Being goodwill brought by Raja and share goodwill adjusted from the bhagwan’s capital account because he is gaining partner) | |||||
| Old Ratio of Anu and Bhagwan | = | 3 : 1 |
| New Ratio of Anu, Bhagwan and Raja | = | 2 : 2 : 1 |
Sacrificing Share = Old Ratio - New Ratio
| Anu’s Sacrificing Share | = | 3 | - | 2 |
| 4 | 5 |
| = | 15 - 8 |
| 20 |
| = | 7 | Sacrifice |
| 20 |
| Bhagwan’s Sacrificing Share | = | 1 | - | 2 |
| 4 | 5 |
| = | 5 - 8 |
| 20 |
| = | (-3) | Gains |
| 20 |
| Goodwill in the books | = | 4,40,000 |
| Anu’s share of Goodwill | = | 4,40,000 | X | 3 |
| 4 | ||||
| = | 3,30,000 |
| Bhagwan’s share of Goodwill | = | 4,40,000 | X | 1 |
| 4 | ||||
| = | 1,10,000 |
| Anu’s share of Goodwill | = | 4,40,000 | X | 3 |
| 4 | ||||
| = | 3,30,000 |
Firm’s Goodwill
Raja’s Share of Goodwill = Firm’s Goodwill X Raja’s share
| Raja’s Share of Goodwill | = | Firm’s Goodwill X | Raja’s share |
| = | 2,50,000 | X | 1 |
| 5 | |||
| = | 50,000 |
| Bhagwan’s Share of Goodwill | = | Firm’s Goodwill X | Raja’s share |
| = | 2,50,000 | X | 3 |
| 5 | |||
| = | 37,500 |
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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