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Balance Sheet of J and K (sharing profits 3 : 2) as at 31st March, 2024: Reserve ₹1,00,000; J’s Capital ₹1,50,000; K’s Capital ₹1,00,000; and assets – Cash ₹2,00,000, Other Assets ₹1,50,000. M joins from 1st April, 2024 for a half share; he pays ₹1,00,000 for goodwill and ₹3,00,000 for capital. Draft the Journal entries and prepare the Balance Sheet, and ascertain the future ratio in each case: (a) M acquires his share from the firm in the partners’ profit-sharing ratio; (b) M acquires his share equally from the partners; (c) M acquires his share in the ratio of 3 : 1 from the partners.
In all cases: Reserve ₹1,00,000 is distributed in the old ratio 3 : 2 (J ₹60,000; K ₹40,000). M brings ₹4,00,000 (Cash A/c Dr. ₹4,00,000 / To M’s Capital ₹3,00,000, To Premium for Goodwill ₹1,00,000); the premium is credited in the sacrificing ratio. The Balance Sheet total is ₹7,50,000 in each case (Cash ₹6,00,000 + Other Assets ₹1,50,000).
(a) New ratio = J 3/10 : K 2/10 : M 5/10 = 3 : 2 : 5; sacrificing ratio 3 : 2 → premium: J ₹60,000, K ₹40,000. Capitals: J ₹2,70,000; K ₹1,80,000; M ₹3,00,000.
(b) Each partner sacrifices 1/4 → J 7/20 : K 3/20 : M 10/20 = 7 : 3 : 10; sacrificing ratio 1 : 1 → premium: J ₹50,000, K ₹50,000. Capitals: J ₹2,60,000; K ₹1,90,000; M ₹3,00,000.
(c) J sacrifices 3/8, K sacrifices 1/8 → J 9/40 : K 11/40 : M 20/40 = 9 : 11 : 20; sacrificing ratio 3 : 1 → premium: J ₹75,000, K ₹25,000. Capitals: J ₹2,85,000; K ₹1,65,000; M ₹3,00,000.
JOURNAL (common entries; premium split varies by case)
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2024 Apr 1 | Reserve A/c Dr. | 1,00,000 | ||
| To J’s Capital A/c | 60,000 | |||
| To K’s Capital A/c | 40,000 | |||
| 2024 Apr 1 | Cash A/c Dr. | 4,00,000 | ||
| To M’s Capital A/c | 3,00,000 | |||
| To Premium for Goodwill A/c | 1,00,000 | |||
| 2024 Apr 1 | Premium for Goodwill A/c Dr. | 1,00,000 | ||
| To J’s / K’s Capital A/c (in the sacrificing ratio of the case) | 1,00,000 |
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.
This guide covers "T.S. Grewal Class 12 Chapter 4 Q.59 - Admission of a Partner", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 4 - Admission of a Partner.
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