Question 24 Chapter 3 of Class 12 Part - 1 VK Publication

Question 24 Chapter 3 of Class 12 Part – 1

Table of Contents

The solution of Question 24 Chapter 3 of Class 12 Part – 1: –

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

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

24. P,Q and R are partners sharing profits and losses in the ratio of 5:3:2. From 1st January 2016, they decide to share profits and losses in equal proportions. The partnership deed provides that in the event of any change in profit-sharing ratio the Goodwill should be valued at three years’ purchase of the average of five years’ profits. The profit and losses of the preceding five years are
Profits: 2011 – Rs. 60,000; 2012- Rs. 1,50,000; 2013- Rs. 1,70,000; 2014- Rs. 1,9000
Loss: 2015- Rs. 70,000.
Give the necessary journal entries to record the above change.

The solution of Question 24 Chapter 3 of Class 12 Part – 1: –

Total Profit = 60,000+1,50,000+1,70,000+1,90,000-70,000 = Rs. 5,00,000

Average Profit	=	5,00,000
		5

= Rs. 1,00,000

Goodwill at three years’ purchase= 1,00,000 x 3 = Rs . 3,00,000
Effect of change in profit sharing ratio:

Particulars	P	Q	R
Partners’ Old Ratio	5/10	3/10	2/10
Partners’ New Ratio	1/3	1/3	1/3
Difference	5/30	(-1)/30	(-4)/30
Effect	Sacrifice	Gain	Gain

Amount of compensation =5/30 x 3,00,000 = Rs. 50,000.

Journal Entry

Date	Particulars		L . F	Dr. ₹	Cr. ₹
2016	Q’s Capital A/c	Dr.		10,000
Jan. 1	R’s Capital A/c	Dr.		40,000
	To P’s Capital A/c				50,000
	( Being P Compensated by Q and R for the sacrifice made by him )