Question 25 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 25 Chapter 5 of +2-A

Question 25 Chapter 5 of +2-A

25. A and B are in partnership sharing profits and losses in the ratio of 5 : 3. C is admitted as a partner who pays 40,000 as capital and the necessary amount of goodwill which is valued at 60,000 for the firm. His share of profits will be 1/5th which he takes 1/10th from A and 1/10th from B.
Give Journal entries and also calculate future profit-sharing ratio of the partners.

 

The solution of Question 25 Chapter 6 of +2-A

Date Particulars
L.F. Debit Credit
  Cash A/c Dr   52,000  
  To C’s Capital A/c       40,000
  To Premium for Goodwill A/c       12,000
  (Being C brought his share of goodwill)        
  Premium for Goodwill A/c Dr   12,000  
  To A’s Capital A/c       6,000
  To B’s Capital A/c       6,000
  (Being goodwill distributed among the old partners’ in their sacrificing ratio)        

Working Note: –

Old Ratio of A and B = 5 : 3
Sacrificing Ratio of A and B = 1/10 : 1/10

New Share = Old Ratio – Sacrificing Ratio


A’s New Share = 5 1
8 10
  = 25 – 4
40
  = 21  
  40

 

B’s Sacrificing Share = 3 1
8 10
  = 15 – 4
40
  = 11  
  40

 

New Ratio of A, B and C = 21 : 11 : 1
40 40 5
  = 21 : 11 : 8
40 40 40
  = 21 : 11 : 8

Distribution of C’s share of Goodwill
C’s share of Goodwill

A &B will get share of Goodwill = New Partner’s Share of Goodwill X Sacrificing Ratio

  = 12,000 X 1
2
  = 6000 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

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 25 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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