Question 10 Chapter 4 of +2-A
Table of Contents
10. Jai and Raj are partners sharing profits in the ratio of 3: 2. With effect from 1st April 2019, they decided to share profits equally. Goodwill appeared in the books at 25,000. As on 1st April 2019, it was valued at 1,00,000. They decided to carry goodwill in the books of the firm.
Pass the Journal entry giving effect to the above.
The solution of Question 10 Chapter 4 of +2-A:
| Old Ratio of Jai and Raj | = | 3:2 |
| New Ratio of Jai and Raj | = | 1:1 |
Calculate the Sacrificing or Gaining Ratio of Partners
Sacrificing or Gaining Ratio = Old Ratio – New Ratio
| Jai’s Sacrificing/Gaining share | = | 3 | – | 1 |
| 5 | 2 |
| = | 6 – 5 | |
| 10 |
| = | 1 | (Sacrificing) |
|
| 10 |
| Raj’s Sacrificing/Gaining share | = | 2 | – | 1 |
| 5 | 2 |
| = | 4 – 5 | |
| 10 |
| = | – 1 | Gaining | |
| 10 |
Calculation of Goodwill: –
Goodwill = Total Goodwill + Already Appear in the books
= 1,00,000 + 25,000
= 75,000
Adjustment of Goodwill: –
| Amount of Goodwill Credited to Jai’s Capital | = | 75,000 | X | 1 |
| 10 | ||||
| = | 7,500 |
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| Amount of Goodwill Debited to Raj’s Capital | = | 75,000 | X | 1 |
| 10 | ||||
| = | 7,500 |
| In the Books of _______________ | |||||
| Date | Particulars |
L.F. | Debit | Credit | |
| 2019 | |||||
| April 1 | Raj’s Capital A/c | Dr | 7,500 | ||
| To Jai’s Capital A/c | 7,500 | ||||
| (Being amount of goodwill adjusted through a capital account) | |||||
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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
