Question 28 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 28 Chapter 6 of +2-A

Question 28 Chapter 6 of +2-A

28. Ram, Laxman and Bharat are partners sharing profits in the ratio of 3 : 2 : 1. Goodwill is appearing in the books at a value of 1,80,000. Laxman retires and at the time of his retirement, goodwill is valued at 2,52,000. Ram and Bharat decided to share future profits in the ratio of 2 : 1. The Profit for the first year after Laxman’s retirement amount to 1,20,000. Give the necessary Journal entries to record goodwill and to distribute the profit. Show your calculations clearly.

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

Journal Entries

Date Particulars
L.F. Debit Credit
  Ram’s Capital A/c Dr.   90,000  
  Laxman’s Capital A/c Dr.   60,000  
  Bharat’s Capital A/c Dr.   30,000  
  To Goodwill A/c       1,80,000
  (Being Goodwill written off)      
           
  Ram’s Capital A/c Dr.   42,000  
  Bharat’s Capital A/c Dr.   42,000  
  To Laxman’s Capital A/c       84,000
  (Being Adjustment of Laxman ′s share of goodwill)      
           
  Profit & Loss Appropriation A/c Dr.    1,20,000  
  To Ram’s Capital A/c       80,000
  To Laxman’s Capital A/c       40,000
  (Being Profit on revaluation transferred to Partners ′ Capital A/c)      
           

Working Note: –

Calculation of Ratios

Ram :Laxman :Bharat = 3:2:1(Old ratio)
Ram :Bharat = 2:1(New ratio)
Gaining Ratio = New Ratio − Old Ratio

Ram’s Gain = 2 3
3 6
         
  = 4 3
  6
         
  = 1    
  6    

 

 

Bharat’s Gain = 1 1
3 6
         
  = 2 1
  6
         
  = 1    
  6    

Calculation of Retiring Partner’s Share of Goodwill

 

Laxman’s share of goodwill = 2,52,000 X 2
6
         
  = Rs 84,000    

Laxman’s share of goodwill will be brought by Ram and Bharat in their gaining ratio1:1

Therefore, Ram’s and Bharat Capital A/c will be debited with = 84,000 X 1
2
         
  = Rs 42,000    

 

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)

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 28 Chapter 6 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.