Question 13 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Q-13 - CH-6 - T.S. Grewal +2 Book 2019 - Solution-min

Question 13 Chapter 6 of +2-A

13. L, M, and O are partners sharing profits and losses in the ratio of 4 : 3 : 2. M retires and the goodwill is valued at 72,000. Calculate M’s share of goodwill and pass the Journal entry for Goodwill. L and O decided to share the future profits and losses in the ratio of 5 : 3.

The solution of Question 13 Chapter 6 of +2-A: –

 

Date Particulars
L.F. Debit Credit
  L’s Capital A/c Dr   13,000  
  O’s Capital A/c Dr   11,000  
  To M’s Capital A/c       24,000
  (Being share of M’s goodwill adjusted)      

Working Note: –

Old Ratio of L, M, and O = 4: 3: 2
M retires from the firm

New Ratio of L, and O = 5 : 3

Calculation of Gaining Ratio: –

Gaining Ratio = New Ratio – Old Ratio

L’s Gaining Share = 5 4
8 9
         
  = 45 32
  72
         
  = 13    
  72    

 

O’s Gaining Share = 3 2
8 9
         
  = 27 16
  72
         
  = 11    
  72    

 

Firm’s Share of Goodwill = 72,000

M’s Share of Goodwill =  Firm’s Goodwill X M’s Shares

M Share of Goodwill = 72,000 X 3
9
         
  = 24,000    

Gaining Ratio of L and O = 13:11

L will pay for M’s Share of Goodwill = 24,000 X 13
24
         
  = 13,000    

 

O will pay for M’s Share of Goodwill = 24,000 X 11
24
         
  = 11,000    

 

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

 

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2 Book 1 min - Question 13 Chapter 6 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms