Question 30 Chapter 3 of Class 12 Part – 1
30. Charu and Dinesh have been sharing profits in the ratio of 3:1. The net profits for the past four years’ have been Rs. 60,000; Rs. 50,000; Rs 90,000 and Rs. 1,20,000 respectively. It is now agreed that with effect from 1st April, 2017. Dinesh is to have 2/5th share in profits and for that purpose goodwill is to be valued on the basis of 2½ years’ purchase of average profit of the past four years. Give journal entry for the treatment of goodwill assuming that no goodwill account is to be opened.
The solution of Question 30 Chapter 3 of Class 12 Part – 1: –
Journal Entry
| Date |
Particulars |
|
L . F | Dr. ₹ | Cr. ₹ |
| 2017 | Dinesh’s Capital A/c | Dr. | 30,000 | ||
| April 1 | To Charu’s Capital A/c | 30,000 | |||
| ( Being proportionate share of Goodwill adjusted among partners ) |
Working Notes:
| Average Profit | = | Total Profit |
| Total No. of Year |
| = | 60,000+50,000+90,000+1,20,000 | |
| 5 |
= Rs. 80,000
Goodwill= Average Profit x Number of Years’ Purchase = 80,000 x 2 = Rs. 2,00,000
| Particulars |
Charu |
Dinesh |
| Partners’ Old Ratio | 3/4 | 1/4 |
| Partners’ New Ratio | 3/5 | 2/5 |
| Difference | 3/20 | (-3)/20 |
| Net Effect | Sacrifice | Gain |
Thus Proportionate Share of Goodwill to be adjusted
| 2,00,000 | X | 3 |
| 20 |
= Rs. 30,000.
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Also, Check out the solved question of previous Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
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