Question 21 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 21 Chapter 6 of +2-A

Question 21 Chapter 6 of +2-A

21. A, B, C and D are partners in firm sharing profits, in the ratio of 2: 1 : 2: 1. On the retirement of C, Goodwill was valued 1,80,000. A B and D decide to share future profits equally. Pass the necessary journal entry for the treatment of goodwill.

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

 

Date Particulars
L.F. Debit Credit
  B’s Capital A/c Dr   30,000  
  D’s Capital A/c Dr   30,000  
  To N’s Capital A/c       60,000
  (Being Adjustment of C′s share of goodwill)      
           
           

Working Note: –

i. Calculation of B’s share of goodwill

A :B :C 😀 = 2:1:2:1(Old ratio)
A :B :C 😀 = 2:1:2:1(Old ratio)

ii Gaining Ratio

 

A’s Gain = 1 2
3 6
         
  = 2 2
  6
         
  = 0    
  6    

 

B’s Gain = 1 1
3 6
         
  = 2 1
  6
         
  = 1    
  6    

 

D’s Gain = 1 1
3 6
         
  = 2 1
  6
         
  = 1    
  6    

A:B:D = 0: 1: 1

Calculation of Retiring Partner’s Share of Goodwill

C’s share of goodwill = 1,80,000 X 2
6
         
  = Rs 60,000    

C’s share of goodwill will be brought by B and D in their gaining ratio1:1

Therefore, B’s and D’s Capital will be debited with = 60,000 X 2
6
         
  = Rs 30,000    

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 21 Chapter 6 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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