Question 31 Chapter 5 of +2-Part-1
31. (Goodwill is to be calculated and not brought in cash) A and B are partners sharing profits in the ratio of 2/5 and 3/5. They admit C as a partner who brings in Rs. 10,000 as capital. Goodwill is to be valued at three years purchase of the five years average profits. The profits for the years were Rs. 2,500,Rs. 3,500, Rs. 5,500, Rs. 4,000 and Rs. 4,500. The new profits sharing ratio will be 2/5, 2/5 and 1/5.
The solution of Question 31 Chapter 5 of +2 Part-1: –
| Journal | |||||
| Date | Particulars |
L.F. | Debit | Credit | |
| i) | Cash A/c | Dr. | 10,000 | ||
| To C’s Capital A/c | 10,000 | ||||
| (Being capital brought by C in cash ) | |||||
| ii) | C‘s Current A/c | Dr. | 2,400 | ||
| To B’s Capital A/c | 2,400 | ||||
| (Being C’s share of goodwill transferred to B’s capital account) | |||||
Working notes
Calculation of total goodwill of the firm
| Goodwill | = | Total profits | x | No. Of year purchase |
| No. Of years | ||||
| = | Rs. ( 2,500+3,500+5,500+4,000+4,500 | x | 3 | |
| 5 | ||||
| = | 20,000 | x | 3 | |
| 5 | ||||
| = | Rs 12,000 |
2. Sacrificing ratio= Old ratio – new ratio
| A’s sacrifice | = | 2 | – | 2 |
| 5 | 5 | |||
| = | NIl |
| B’s sacrifice | = | 3 | – | 2 |
| 5 | 5 | |||
| = | 3 – 2 | |||
| 5 | ||||
| = | 1 | |||
| 5 |
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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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