# Question 28 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question No.28 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

Question 28 Chapter 5 of +2-A

28. Anshul and Parul are partners sharing profits in the ratio of 3 : 2. They admit Payal as partner for 1/4th share in profits on 1st April, 2019. Payal brings 5,00,000 as capital and her share of goodwill by cheque. It was agreed to value goodwill at three years’ purchase of average profit of last four years. Profits for the last four years ended 31st March,

 2015-16 4,00,000 2016-17 5,00,000 2017-18 6,00,000 2018-19 7,00,000

1. Closing Stock for the year ended 31st March, 2018 was overvalued by 50,000.
2. 1,00,000 should be charged annually to cover management cost. Pass necessary Journal entries on Payal’s admission.

The solution of Question 28 Chapter 6 of +2-A

 Date Particulars L.F. Debit Credit Bank A/c Dr 8,37,500 To Payal’s Capital A/c 5,00,000 To Premium for Goodwill A/c 3,37,500 (Being C brought his share of goodwill) Premium for Goodwill A/c Dr 3,37,500 To Anshul’s Capital A/c 2,02,500 To X’s Capital A/c 1,35,000 (Being goodwill distributed among the old partners’ in their sacrificing ratio)

 Particulars /Year Ended 31st March, 2016 31st March, 2017 31st March, 2018 31stMarch, 2019 Profit/(Loss) 4,00,000 5,00,000 6,00,000 7,00,000 Less: Overvaluation of Closing Stock – 50,000 Add: Overvaluation of Opening Stock 50,000 Less: Annual Charge for Management Cost – 1,00,000 -1,00,000 -1,00,000 -1,00,000 Adjusted Profits/(Loss) 3,00,000 4,00,000 4,50,000 6,50,000

 Average Profit = Total Profit for past given years Number of years
 Average Profit = 3,00,000+4,00,000+4,50,000+6,50,000 4
 Average Profit = 18,00,000 4 = 4,50,000

 Number of years’ purchase = 3 Goodwill = Average Profit X Number of years’ purchase Goodwill = 4,50,000 X 3 Goodwill = 13,50,000

 Old Ratio of Anshul and Parul = 3 : 1 New Ratio of Anshul, Parul and Payal = 1 : 1 : 1

Sacrificing Share = Old Ratio – New Ratio

 Anshul’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

 Total Firm’s Goodwill = 13,50,000

 Payal’s share of Goodwill = 13,50,000 X 1 4 = 3,37,500

Distribution of Payal’s share of Goodwill
Share of Goodwill = Payal’s Goodwill  X Partners’ Sacrifice share

 Anshul’s Share of Goodwill = 3,37,500 X 3 5 = 2,02,500

 Parul’s Share of Goodwill = 3,37,500 X 2 5 = 1,35,000

### 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)

• 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