Question 22 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 22 Chapter 5 of +2-A

Question 22 Chapter 5 of +2-A

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

  1. 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.
  2. 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

A’s get share of Goodwill = 2,000 X 3
5
  = 1,200    

 

B’s get share of Goodwill = 2,000 X 2
5
  = 800    

 

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
  = 2 : 1
12 12
  = 2 : 1

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

A’s get share of Goodwill = 2,100 X 2
3
  = 1,400    

 

B’s get share of Goodwill = 2,100 X 1
3
  = 700
   

 


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 22 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

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