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

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

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Question 23 Chapter 5 of +2-A

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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

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DateParticulars
L.F.DebitCredit
 Cash A/cDr 15,000 
 To Premium for Goodwill A/c   15,000
 (Being C brought his share of goodwill)    
 Premium for Goodwill A/cDr 15,000 
 C’s Capital A/cDr 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=11
3
 =3 – 1
3
 =2
 3

 

B and C each share of profit after D’s admission=2X1
32
 =1
 3

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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=31
43
 =9 – 4
12
 =5Sacrifice
 12

 

C’s Sacrificing Share=11
43
 =3 – 4
12
 =(-1)Gains
 12

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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=15,000X3
1
 =45,000  

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C’s Share of Goodwill=Firm’s Goodwill  X Gaining share of C’s
B’s get share of Goodwill=45,000X1
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)

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

 

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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