Question 20 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 20 Chapter 5 of +2-A

Question 20 Chapter 5 of +2-A

20. A and B are partners sharing profits and losses in the ratio of 2 : 5. They admit C on the condition that he will bring 14,000 as his share of goodwill to be distributed between A and B. C’s share in the future profits or losses will be 1/4th. What will be the new profit-sharing ratio and what amount of goodwill brought in by C will be received by A and B?

 

The solution of Question 20 Chapter 6 of +2-A

Old Ratio of A and B = 2 : 5
C is admitted for 1/4th share of profit    

Let the total share of the business = 1
Remaining share of A and B after C’s Admission= Total Share – C’s Share

Remaining share = 1 1
4
  = 4 – 1
4
  = 3
  4


To Calculate to New Ratio distribute the remaining share in the old ratio of old partners’

New Ratio= Combined share of A and B X Old Ratio

A’s New Ratio = 3 X 2
4
  = 6
  28



B’s New Ratio = 3 X 5
4 7
  = 15
  28

 

C’s New Ratio = 1 X 7
4 7
  = 7
  28
New Profit sharing Ratio between A ,B and C = 6 : 15 : 7

 

Distribution of C’s share of Goodwill
C’s share of Goodwill = 14,000

A’s get share of Goodwill = 14,000 X 2
7
  = 4,000    

 

B’s get share of Goodwill = 14,000 X 2
7
  =  10,000    

 


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 20 Chapter 5 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms