Question 34 Chapter 3 of Class 12 Part – 1
34. A, B and C were partners in a firm sharing profits in the ratio of 1:3:2. They decided that with effect from 1st April, 2018, they will share profits in the ratio of 4:6:5. For this purpose, the goodwill of the firm is valued at the total of previous three years’ profits. The profits Were:
| Year | Rs. |
| 31st March, 2015 | 10,000 (Loss) |
| 31st March, 2016 | 80,000 (Loss) |
| 31st March, 2017 | 1,20,000 |
| 31st March, 2018 | 1,40,000 |
Reserves and accumulated profits appeared in the Balance Sheet at Rs. 40,000 and Rs. 30,000 respectively. Partners neither want to show goodwill in the books nor want to distribute the reserves and profits appearing in the Balance Sheet. Pass a single journal entry to record the change.
The solution of Question 34 Chapter 3 of Class 12 Part – 1: –
Journal Entry
| Date |
Particulars |
|
L . F | Dr. ₹ | Cr. ₹ |
| 2017 | A’s Capital A/c | Dr. | 25,000 | ||
| April 1 | To B’s Capital A/c | 25,000 | |||
| ( Being proportionate share of Goodwill , Reserve and P & L adjusted between partners) |
Working Note:
Sacrificing Share = Old Share – New Share
| Particulars |
A |
B | C |
| Partners’ Old Ratio | 1/6 | 3/6 | 2/6 |
| Partners’ New Ratio | 4/15 | 6/15 | 5/15 |
| Difference | (-3)/30 | (-3)/30 | (Nil) |
Amount to be Adjusted:
| Profit and Loss Account | Rs. 30,000 |
| Reserve = | Rs. 40,000 |
| Goodwill = | Rs. 1,80,000 |
| Rs. 2,50,000 |
Amount of compensation= 2,50,000 x3/30 = Rs. 25,000
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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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