Question 43 Chapter 5 of +2-A
43. Bhuwan and Shivam were partners in a firm sharing profits in the ratio of 3 : 2. Their capitals were 50,000 and 75,000 respectively. They admitted Atul on 1st April, 2018 as a new partner for 1/4th share in future profits. Atul brought 75,000 as his capital. Calculate the value of goodwill of the firm and record necessary Journal entries for the above transactions on
Atul's admission.
| Date | Particulars |
L.F. | Debit | Credit | |
|---|---|---|---|---|---|
| Bank A/c | Dr | 75,000 | |||
| To Atul’s Capital A/c | 75,000 | ||||
| (Being received Atul’s share of capital account) | |||||
| Atul’s Current A/c | Dr | 25,000 | |||
| To Bhuwan’s Capital A/c | 15,000 | ||||
| To Shivam’s Capital A/c | 10,000 | ||||
| (Being for goodwill distributed in sacrificing ratio of 3:2) | |||||
Total Capital of the firm on the Basis of Atul’s Capital
Total Capital of the firm = Atul’s Capital * Reciprocal of his share
| = | 75,000 | * | 4 |
| 1 | |||
| = | 3,00,000 |
Actual Capital of Firm = Capital of Old Partners + Incoming Partner’s Capital
| = | 50,000+ 75,000+ 75,000 |
| = | 2,00,000 |
| Goodwill | = | Total Capital of the firm on basis of Charu’s Capital |
- Actual Capital of Firm |
| = | 3,00,000 | -2,00,000 | |
| = | 1,00,000 |
| Atul’s Share of Goodwill | = | Firm’s Goodwill x | Share of E’s |
| = | 1,00,000 | X | 1 |
| 4 | |||
| = | 25,000 |
Sacrificing Ratio of Bhuwan and Shivam = 3 : 2
| Bhuwan will get Share of Goodwill | = | Atul’s Goodwill X | Sacrifice share of Bhuwan |
| = | 25,000 | X | 3 |
| 5 | |||
| = | 15,000 |
| Shivam will get Share of Goodwill | = | Atul’s Goodwill X | Sacrifice share of Shivam |
| = | 25,000 | X | 2 |
| 5 | |||
| = | 10,000 |
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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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