# Question 21 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question No.21 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

Question 21 Chapter 5 of +2-A

21. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. A new partner C is admitted. A surrenders 1/5th of his share and B surrenders 2/5th of his share in favour of C. For the purpose of C’s admission, goodwill of the firm is valued at 75,000 and C brings in his share of goodwill in cash which is retained in the firm’s books. Journalise the above transactions.

The solution of Question 21 Chapter 6 of +2-A

 Date Particulars L.F. Debit Credit Cash A/c Dr 21,000 To Premium for Goodwill A/c 21,000 (Being C brought his share of goodwill) Premium for Goodwill A/c Dr 21,000 To A’s Capital A/c 9,000 To B’s Capital A/c 12,000 (Being goodwill distributed among the old partners’ in their sacrificing ratio)

 Old Ratio of A and B = 3 : 2 A surrenders 1/5th of his share in the favour of C B surrenders 2/5th of his share in the favour of C

In this case we have to calculate the sacrificing share of both partners with the following formula and then subtract this share from the profit share of old partners: –

Sacrificing Share of Old Partners = Old Partner’s Share X Sacrificed Ratio

 A Sacrifice Share = 3 X 1 5 5
 = 3 25

 B Sacrifice Share = 2 X 2 5 5
 = 10 25

New Ratio of Old Partners = Old Ratio – Sacrificed Ratio

 A New Profit Share = 3 – 3 5 25
 = 15 – 3 25
 = 12 25

 B New Profit Share = 2 X 4 5 25
 = 10 – 4 25
 = 6 25
 C’s Share = A’s Sacrificing + B’s Sacrificing
 C’s New Ratio = 3 + 4 25 25
 = 3 + 4 25

 = 7 25
 New Profit sharing Ratio between A ,B and C = 12 : 6 : 7

Calculate the C’s share of Goodwill
Firm’s Total Goodwill = 75,000

 A’s get share of Goodwill = 75,000 X 7 25 = 21,000

Distribution of C’s share of Goodwill
C’s share of Goodwill = 21,000

 A’s get share of Goodwill = 21,000 X 3 7 = 9,000

 B’s get share of Goodwill = 21,000 X 2 7 = 6,000

### 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