Question 18 Chapter 6 of +2-A - T.S. Grewal 12 Class Part

Question 18 Chapter 6 of +2-A

Table of Contents

The solution of Question 18 Chapter 6 of +2-A: –

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

18. X, Y and Z are partners sharing profits in the ratio of 3 : 2 : 1. Goodwill is appearing in the books at a value of 60,000. Y retires and at the time of Y’s retirement, goodwill is valued at 84,000. X and Z decided to share future profits in the ratio of 2 : 1. Pass the necessary Journal entries through Goodwill Account

The solution of Question 18 Chapter 6 of +2-A: –

Date	Particulars		L.F.	Debit	Credit
	X’s Capital A/c	Dr		30,000
	Y’s Capital A/c	Dr		20,000
	Z’s Capital A/c	Dr		10,000
	To Goodwill A/c				60,000
	(BeingGoodwill wrote off )



	X’s Capital A/c	Dr		14,000
	Z’s Capital A/c	Dr		14,000
	To Y’s Capital A/c				28,000
	(BeingAdjustment of Y′s share of goodwill)

Working Note: –

X :Y :Z = 3:2:1(Old ratio)
X :Z = 2:1(New ratio)

Calculation of Gaining Ratio: –

Gaining Ratio = New Ratio – Old Ratio

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X’s Gain	=	2	–	3
X’s Gain	=	3	–	6

	=	4	–	3
	=	6

	=	1
	=	6

Z’s Gain	=	1	–	1
Z’s Gain	=	3	–	6

	=	2	–	1
	=	6

	=	1
	=	6

X:Z = 1: 1

Calculation of Retiring Partner’s Share of Goodwill

Y’s share of goodwill	=	84,000	X	2
Y’s share of goodwill	=	84,000	X	6

	=	28,000

Therefore, X’s Capital A/c will be debited with	=	28,000	X	1
Therefore, X’s Capital A/c will be debited with	=	28,000	X	2

	=	14,000

Therefore, Z’s Capital A/c will be debited with	=	28,000	X	1
Therefore, Z’s Capital A/c will be debited with	=	28,000	X	2

	=	14,000

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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