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

Question 06 Chapter 4 of +2- Part-

Question 06 Chapter 4 of +2-Part-1

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 = 5 1
10 3
  = 15 – 10
  30
  = 5 (Sacrificing)
  30
Y’s Share Sacrificing/Gaining = 2 1
10 3
  = 9 – 10
  30
  = -1 (Gaining)
  30
Z’s Share Sacrificing/Gaining = 2 1
10 3
  = 6 – 10
  30
  = -4 (Gaining)
  30

 

 

(i) When no goodwill appears in the books.

In the Books of _______________
Date Particulars
L.F. Debit Credit
           
April 1 Y’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)      
         

 

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

In the Books of _______________
Date Particulars
L.F. Debit Credit
           
April 1 X’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.

In the Books of _______________
Date Particulars
L.F. Debit Credit
           
April 1 X’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

In the Books of _______________
Date Particulars
L.F. Debit Credit
           
April 1 X’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.   6,000  
  To Goodwill A/c       21,000
  (Being excess goodwill written off in the old profit sharing ratio)      
         

 

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

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

Chapter No. 1 – Accounting Not for Profit Organisations

Chapter No. 2 – Partnership Accounts – I

Chapter No. 3 – Partnership Accounts – II (Introduction)

Chapter No. 4 – Partnership Accounts – III (Goodwill: Nature and Valuation)

Chapter No. 5 – Partnership Accounts – IV (Reconstitution of Partnership)

Chapter No. 6 – Partnership Accounts – V (Admission of A Partner)

Chapter No. 7 – Partnership Accounts – VI (Retirement and Death of A Partner)

Chapter No. 8 – Company Accounts (Share Capital)

Chapter No. 9 – Company Accounts (Issue of Debentures)

Chapter No. 10 – Company Accounts (Redemption of Debentures)

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

Chapter No. 1 – Financial Statements of a Company (Balance Sheet Only)

Chapter No. 2 – Techniques of Financial Statement Analysis

Chapter No. 3 – Ratio Analysis 

Chapter No. 4 – Cash Flow Statement

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

2 Book 1 min - Question 06 Chapter 4 of +2 Part-1 - USHA Publication  12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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