Question 22 Chapter 5 of +2-A - T.S. Grewal 12 Class Part

Question 22 Chapter 5 of +2-A

Table of Contents

22. Give Journal entries to record the following arrangements in the books of the firm:

B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium (goodwill) of 2,000 for 1/4th share of the profits, shares of B and C remain as before.
B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium of 2,100 for 1/4th share of profits which he acquires 1/6th from B and 1/12th from C.

The solution of Question 22 Chapter 6 of +2-A

Case A

Date	Particulars		L.F.	Debit	Credit
	Cash A/c	Dr		2,000
	To Premium for Goodwill A/c				2,000
	(Being C brought his share of goodwill)
	Premium for Goodwill A/c	Dr		2,000
	To B’s Capital A/c				1,200
	To C’s Capital A/c				800
	(Being goodwill distributed among the old partners’ in their sacrificing ratio)

Working Note: –

Distribution of C’s share of Goodwill
C’s share of Goodwill = 2,000

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Case B

Date	Particulars		L.F.	Debit	Credit
	Cash A/c	Dr		2,100
	To Premium for Goodwill A/c				2,100
	(Being C brought his share of goodwill)
	Premium for Goodwill A/c	Dr		2,100
	To B’s Capital A/c				1,400
	To C’s Capital A/c				700
	(Being goodwill distributed among the old partners’ in their sacrificing ratio)

Working Note: –

Sacrificing Ratio of A and B	=	1	:	1
		6		12

Distribution of C’s share of Goodwill
C’s share of Goodwill = 2,100

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