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

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)

• 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