# Question 31 Chapter 5 of +2 Part-1 – USHA Publication 12 Class Part – 1

Q-31. - CH-2 - Usha +2 Book 2018 - Solution

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