Question 24 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 24 Chapter 5 of +2-A

Question 24 Chapter 5 of +2-A

24. M and J are partners in a firm sharing profits in the ratio of 3 : 2. They admit R as a new  partner. The new profit-sharing ratio between M, J and R will be 5 : 3 : 2. R brought in 25,000 for his share of premium for goodwill. Pass necessary Journal entries for the treatment of goodwill.

 

The solution of Question 24 Chapter 6 of +2-A

Date Particulars
L.F. Debit Credit
  Cash A/c Dr   25,000  
  To Premium for Goodwill A/c       25,000
  (Being C brought his share of goodwill)        
  Premium for Goodwill A/c Dr   25,000  
  To M’s Capital A/c       12,500
  To J’s Capital A/c       12,500
  (Being goodwill distributed among the old partners’ in their sacrificing ratio)        

 

Old Ratio of M and J = 3 : 1
New Ratio of M, J, and R = 5 : 3 : 2

Sacrificing Share = Old Ratio – New Ratio

M’s Sacrificing Share = 3 5
5 10
  = 6 – 5
10
  = 1 Sacrifice
  10

 

J’s Sacrificing Share = 2 3
5 10
  = 4 – 3
12
  = 1 Sacrifice
  10
Sacrificing Ratio = 1 : 1
10 10
  = 1 : 1

Distribution of D’s share of Goodwill
D’s share of Goodwill = 25,000

M & J will get share of Goodwill = New Partner’s Share of Goodwill X Sacrificing Ratio

  = 25,000 X 1
2
  = 12,500 each
   

 


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 24 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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