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

Question 13 Chapter 6 of +2-A

Table of Contents

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

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

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
L’s Gaining Share	=	8	–	9

	=	45	–	32
	=	72

	=	13
	=	72

O’s Gaining Share	=	3	–	2
O’s Gaining Share	=	8	–	9

	=	27	–	16
	=	72

	=	11
	=	72

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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
M Share of Goodwill	=	72,000	X	9

	=	24,000

Gaining Ratio of L and O = 13:11

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

	=	13,000

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

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