# Question 23 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question No.23 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

Question 23 Chapter 5 of +2-A

23. B and C are in partnership sharing profits and losses as 3 : 1. They admit D into the firm, D pays premium of 15,000 for 1/3rd share of the profits. As between themselves, B and C agree to share future profits and losses equally. Draft Journal entries showing appropriations of the premium money.

The solution of Question 23 Chapter 6 of +2-A

 Date Particulars L.F. Debit Credit Cash A/c Dr 15,000 To Premium for Goodwill A/c 15,000 (Being C brought his share of goodwill) Premium for Goodwill A/c Dr 15,000 C’s Capital A/c Dr 15,000 To B’s Capital A/c 18,750 (Being goodwill distributed among the old partners’ in their sacrificing ratio)

 Old Ratio of B and C = 3 : 1 D is admitted for 1/3th share of profit

Let the total share of the business = 1
Remaining share of B and C after D’s Admission = Total Share – D’s Share

 Remaining share = 1 – 1 3
 = 3 – 1 3
 = 2 3

 B and C each share of profit after D’s admission = 2 X 1 3 2
 = 1 3

 Old Ratio of B and C = 3 : 1 New Ratio of B, C, and D = 1 : 1 : 1

Sacrificing Share = Old Ratio – New Ratio

 B’s Sacrificing Share = 3 – 1 4 3
 = 9 – 4 12
 = 5 Sacrifice 12

 C’s Sacrificing Share = 1 – 1 4 3
 = 3 – 4 12
 = (-1) Gains 12

Distribution of D’s share of Goodwill
D’s share of Goodwill = 15,000
C’s gaining the share in the firm’s profit so only B will received the share of goodwill brought by D and he will also receive the share of goodwill from C

 Total Firm’s Goodwill = 15,000 X 3 1 = 45,000

 C’s Share of Goodwill = Firm’s Goodwill  X Gaining share of C’s
 B’s get share of Goodwill = 45,000 X 1 12 = 3,750

### 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