Question 31 Chapter 5 of +2- Part-

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
DateParticulars
L.F.DebitCredit
2019     
i)Bank A/cDr. 10,000 
 To C’s Capital A/c   10,000
 (Being capital brought by C in cash )   
     
ii)C‘s capital A/cDr. 2,400 
 To B’s Capital A/c   2,400
 (Being C’s share of goodwill distributed into capital account of B)    
     

Working notes

Calculation of new profit sharing ratio

Goodwill=Total profitsxNo. Of year purchase
 No. Of years
     
 =Rs. ( 2,500+3,500+5,500+4,000+4,500x3
 5
     
 =20,000x3
 5 
     
 =Rs 12,000  

2. Sacrificing ratio= Old ratio – new ratio

A’s sacrifice=22
55
     
 =NIl  
B’s sacrifice=34
55
     
 =3 – 4  
 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

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 - Question 31 Chapter 5 of +2 Part-1 - USHA Publication 12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firm

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