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Question 30 Chapter 3 of Class 12 Part – 1 VK Publication

Question 30 Chapter 3 of Class 12 Part - 1 VK Publication
Question 30 Chapter 3 of Class 12 Part - 1 VK Publication

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Question 30 Chapter 3 of Class 12 Part – 1

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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 . FDr. ₹Cr. ₹
2017Dinesh’s Capital A/cDr. 30,000 
April 1To 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

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= Rs. 80,000

Goodwill= Average Profit x Number of Years’ Purchase = 80,000 x 2 = Rs. 2,00,000

Particulars

Charu

Dinesh
Partners’ Old Ratio3/41/4
Partners’ New Ratio3/52/5
Difference3/20(-3)/20
Net EffectSacrificeGain

Thus Proportionate Share of Goodwill to be adjusted

2,00,000X3
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

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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