Question 35 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

The solution of Question 34 Chapter 5 of +2-A - T.S. Grewal +2 Book 2019 with the explanation of all transactions to understand better.

Question 35 Chapter 5 of +2-A

35. A and B are partners sharing profits and losses in the ratio of 3: 2. They admit C as a partner in the firm for 1/4th share in profits which he takes 1/6th from A and 1/12th from B. C brings in only 60% of his share of the firm’s goodwill. Goodwill of the firm has been valued at 1,00,000. Pass necessary journal entries to record this arrangement.

The solution of Question 35 Chapter 5 of +2-A: –

Date Particulars
L.F. Debit Credit
  Bank A/c Dr   15,000  
  To Premium for Goodwill A/c     15,000
  (Being C brought his share of capital and goodwill)      
         
  premium for Goodwill A/c Dr   15,000  
  C’s Capital A/c Dr   10,000  
  To A’s Capital A/c       16,667
  To B’s Capital A/c       8,333
  (Being goodwill brought by C distributed among the old partners and balance amount of goodwill adjusted with C’s Capital a/c)      

Working Note: –

Old Ratio of A and B = 3:2

C get his share from the A = 1
6
  = 2
    12

 

C get his share from the B = 1
12

 

Sacrificing Ratio of X and Y = 2: 1

 

Firm’s Share of Goodwill  = 1,00,000

C’s Share of Goodwill = Firm’s Goodwill x C’s share
       
  = 10,000 X 1
4
  = 25,000
   

 

B will get a share of Goodwill

= C’s Goodwill  X  Sacrifice share of B
Share of Goodwill received in cash = 25,000 X 60
100
  = 15,000
   

C’s Share of Goodwill = 25,000

Sacrificing Ratio of X and Y = 2:1 

A will get a share of Goodwill = C’s Goodwill x Sacrifice share of A
       
  = 25,000 X 2
3
  = 16,667
 
B will get a share of Goodwill = C’s Goodwill x Sacrifice share of B
       
  = 25,000 X 1
3
  = 8,337

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

  • Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
  • Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
  • Chapter No. 3 – Goodwill: Nature and Valuation
  • Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
  • Chapter No. 5 – Admission of a Partner
  • Chapter No. 6 – Retirement/Death of a Partner
  • Chapter No. 7 – Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

  • Chapter No. 1 – Financial Statements of a Company
  • Chapter No. 2 – Financial Statement Analysis 
  • Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
  • Chapter No. 4 – Accounting Ratios
  • Chapter No. 5 – Cash Flow Statement

 

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2 Book 1 min - Question 35 Chapter 5 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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