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Question 22 Chapter 3 of Class 12 Part – 1 VK Publication

Question 22 Chapter 3 of Class 12 Part - 1 VK Publication
Question 22 Chapter 3 of Class 12 Part - 1 VK Publication

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Question 22 Chapter 3 of Class 12 Part – 1

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22. X, Y and Z are partners sharing profits and losses in the ratio of 5:4:1. It was decided the
with effect from 1st April, 2018 the profit-sharing ratio will be 9:6:5. Goodwill is to be valued at 2 years’ purchase of average of 3 years’ profits. The profits for the year ended on 31st March, 2016,2017 and 2018 were Rs. 48,000, Rs. 42,000 and Rs. 60,000 respectively. Pass the necessary journal entry for the treatment of goodwill without opening Goodwill Account.

The solution of Question 22 Chapter 3 of Class 12 Part – 1: –

Sacrificing Ratio = Old Share – New Share

X=59
1020
 =10 – 9
 20
 =1(Sacrifice)
 20

 

Y=46
1020
 =8 – 6
 20
 =2(Sacrifice)
 20
Z=15
1020
 =2 – 5
 20

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 =-3(Gaining)
 20

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Thus Proportionate Share of Goodwill to be adjusted

X = 1,00,000X1
20

= 5,000

Y = 1,00,000X2
20

10,000

Z = 1,00,000X3
20

15,000

Journal Entry

Date

Particulars

 

L . FDr. ₹Cr. ₹
2018Z’s Capital AccountDr. 15,000 
April 1To X’s Capital Account   5,000
 To Y’s Capital Account   10,000
 ( Being proportionate share of Goodwill adjusted among partners)    

Working Notes:
Calculation of Goodwill:

Average Profit=48,000+42,000+60,000
3

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= Rs. 50,000

Goodwill= Average Profit x Number of Years’ Purchase
= 50,000 x 2 = Rs. 1,00,000

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Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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