Question 05 Chapter 4 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 05 Chapter 4 of +2-A

Question 05 Chapter 4 of +2-A

5. A, B and C shared profits and losses in the ratio of 3 : 2 : 1 respectively. With effect from 1st April, 2019, they agreed to share profits equally. The goodwill of the firm was valued at 18,000. Pass necessary Journal entries when: (a) Goodwill is adjusted through Partners’ Capital Accounts; and (b) Goodwill is raised and written off.

The solution of Question 05 Chapter 4 of +2-A

:

 

Old Ratio of X, Y, & Z = 3 : 2 : 1 
New Ratio of X, Y, & Z = 1 : 1 : 1

Calculate the Sacrificing or Gaining Ratio of Partners
Sacrificing or Gaining Ratio = Old Ratio – New Ratio


X’s Share Sacrificing/Gaining = 3 1
6 3
  = 3 – 2
  6
  = 1 Sacrificing
  6
Y’s Share Sacrificing/Gaining = 2 1
6 3
  = 2 – 2
  6
  = Nil

 

Z’s Share Sacrificing/Gaining = 1 1
6 3
  = 1 -2
  6
  = -1 Gaining
  6

Case (a)

Amount of Goodwill for Adjustment = 18,000 X 1
  6
  = 3,000  

 

In the Books of _______________
Date Particulars
L.F. Debit Credit
2019          
April 1 C’s Capital A/c Dr   3,000  
  To A’s Capital A/c       3,000
  (Being amount of goodwill adjusted through capital account)        

 

Case (B)

In the Books of _______________
Date Particulars
L.F. Debit Credit
2019          
April 1 Goodwill A/c Dr   18,000  
  To A’s Capital A/c       9,000
  To B’s Capital A/c       9,000
  To C’s Capital A/c       9,000
  (Being amount of goodwill raised in the books in the old ratio)        
April 1 A’s Capital A/c Dr   6,000  
  B’s Capital A/c Dr   6,000  
  C’s Capital A/c Dr   6,000  
  To Goodwill A/c       18,000
  (Being amount of goodwill written off in the new profit sharing ratio)        

 

 

 


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)

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

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 05 Chapter 4 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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