Question 27 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 27 Chapter 5 of +2-A

Question 27 Chapter 5 of +2-A

27. X and Y are partners sharing profits in the ratio of 3 : 1. Z is admitted as a partner for which he pays 30,000 for godwill in cash. X, Y and Z decide to share the future profits in equal proportion. You are required to pass a single Journal entry to give effect to the above arrangement.

 

The solution of Question 27 Chapter 6 of +2-A

Date Particulars
L.F. Debit Credit
  Cash A/c Dr   30,000  
  To Premium for Goodwill A/c       30,000
  (Being C brought his share of goodwill)        
  Premium for Goodwill A/c Dr   30,000  
  Y’s Capital A/c Dr   7,500  
  To X’s Capital A/c       37,500
  (Being Y and Z share of gain in goodwill transferred
to X’s Capital Account
       

Working Note: –

Old Ratio of X and Y = 3 : 1
New Ratio of X, Y, and Z = 1 : 1 : 1

Sacrificing Share = Old Ratio – New Ratio

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

 

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

 

Distribution of Z’s share of Goodwill
Z’s share of Goodwill = 30,000

X’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 = 30,000 X 3
1
  = 90,000
   

Y’s Share of Goodwill  = Firm’s Goodwill  X Gaining share of C’s

Y’s Share of Goodwill = 90,000 X 1
12
  = 7,500
   

 

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 27 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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