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Question 06 Chapter 4 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 06 Chapter 4 of +2- Part-
Q-6 - CH-4 - Usha +2 Book 2018 - Solution

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Question 06 Chapter 4 of +2-Part-1

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6. (Different cases of treatment of Goodwill) X, Y and Z who are presently sharing profits and losses in the ratio of 5:3:2 decide to share future profits equally with effect from 1st April 2016. The goodwill of the firm has been valued at Rs.1,08,000. Show the necessary accounting treatment under each of the following alternative cases:

  1. When no goodwill appears in the books.
  2. When goodwill appears in the books at Rs.1,08,000.
  3. When goodwill appears in the books at Rs. 18,000.
  4. When goodwill appears in the books at Rs.1,26,000.

The solution of Question 06 Chapter 4 of +2 Part-1: – 

Old Ratio of X, Y, & Z=5 : 3: 2
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=51
103
 =15 – 10
 30
 =5(Sacrificing)
 30
Y’s Share Sacrificing/Gaining=21
103
 =9 – 10
 30
 =-1(Gaining)
 30
Z’s Share Sacrificing/Gaining=21
103

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 =6 – 10
 30
 =-4(Gaining)
 30

(i) When no goodwill appears in the books.

Journal
DateParticulars
L.F.DebitCredit
      
April 1Y’s Capital A/c (1,08,000*1/30)Dr. 3,600 
 Z’s Capital A/c (1,08,000*4/30)Dr. 14,400 
 To X’s Capital A/c (1,08,000*5/30)   18,000
 (Being amount of goodwill adjusted as the change in profit sharing ratio)   
     

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(ii) When goodwill appears in the books at Rs.1,08,000.

Journal
DateParticulars
L.F.DebitCredit
      
April 1X’s Capital A/c (108000*1/3)Dr. 36,000 
 Y’s Capital A/c (108000*1/3)Dr. 36,000 
 Z’s Capital A/c (108000*1/3)Dr. 36,000 
 To Goodwill A/c   1,08,000
 (Being amount of goodwill written off in the new profit sharing ratio)   
     

 

(iii) When goodwill appears in the books at Rs.18,000.

Journal
DateParticulars
L.F.DebitCredit
      
April 1X’s Capital A/c (18000*1/3)Dr. 6,000 
 Y’s Capital A/c (18000*1/3)Dr. 6,000 
 Z’s Capital A/c (18000*1/3)Dr. 6,000 
 To Goodwill A/c   18,000
 (Being amount of goodwill written off in the new profit sharing ratio)   
     

(iv) When goodwill appears in the books at Rs.1,26,000.

Excess Goodwill = 1,26,000-1,08,000 = Rs.18,000

Journal
DateParticulars
L.F.DebitCredit
      
April 1X’s Capital A/c (18,000*5/10)Dr. 9,000 
 Y’s Capital A/c (18,000*3/10)Dr. 6,000 
 Z’s Capital A/c (18,000*2/10)Dr. 3000 
 To Goodwill A/c    
 (Being excess goodwill written off in the old profit sharing ratio)  18000
     

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Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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