Q.No.61 | Chapter 6 – Retirement/Death of a Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 61 Chapter 6 of +2-A

61. P, R and S are in partnership sharing profits 4/8, 3/8 and 1/8 respectively. It is provided in the Partnership Deed that on the death of any partner his share of goodwill is to be valued at one-half of the net profit credited to his account during the last four completed years. R died on 1st January 2018. The firm's profits for the last four years ended 31st December, were as: 2014 − 1,20,000; 2015 − 80,000; 2016 − 40,000; 2017 − 80,000.
a Determine the amount that should be credited to R in respect of his share of Goodwill.
b Pass Journal entry without raising Goodwill Account for its adjustment.

 

The solution of Question 61 Chapter 6 of +2-A: -

 

Profit credited to R’s Capital Account in 4 years = Net profit for the last four years × R’s Share

=	1,20,000 + 80,000 + 80,000 + 4,000	X	2
			12
=	3,20,000	X	3
				8
=	Rs 1,20,000

 

R’s Share of goodwill

=	1,20,000	X	3
				8
=	Rs 60,000

 

 

Date	Particulars		L.F.	Debit	Credit
b	P’s Capital A/c	Dr.		48,000
	S’s Capital A/c	Dr.		12,000
	To R’s Capital A/c				60,000
	(Being R’s share of goodwill adjusted)

 

 

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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