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Question 36 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 36 Chapter 5 of +2-A
Question 36 Chapter 5 of +2-A

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Question 36 Chapter 5 of +2-A

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36. On the admission of Rao, the goodwill of Murty and Shah is valued at 30,000. Rao is to get 1/4th share of profits. Previously Murty and Shah shared profits in the ratio of 3: 2. Rao is unable to bring the amount of goodwill. Give Journal entries in the books of Murty and Shah when:
(a) there is no Goodwill Account and
(b) Goodwill appears in the books at 10,000.

The solution of Question 36 Chapter 5 of +2-A: –

Case A: -Where there is no goodwill account

DateParticulars
L.F.DebitCredit
 Rao’s Capital A/cDr 7,500 
 To Murty’s Capital A/c   4,500
 To Shah’s Capital A/c   3,000
 (Being C’s share of goodwill adjusted with his capital account )   

Working Note: –

Firm’s Share of Goodwill  = 30,000

C’s Share of Goodwill=Firm’s Goodwill xC’s share
    
 =30,000X1
4
 =7,500
  

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Sacrificing Ratio of Murty and Shah = 3:2 

Murty will get a share of Goodwill=C’s Goodwill xSacrifice share of Murty
    
 =7,500X3
5
 =4,500
 
Shah will get a share of Goodwill=C’s Goodwill xSacrifice share of Shah
    
 =7,500X2
5
 =3,000

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DateParticulars
L.F.DebitCredit
 Murty’s Capital A/cDr. 6,000 
 Shah’s Capital A/cDr. 4,000 
 To Premium for Goodwill A/c  10,000
 (Being goodwill written off which is already in the books)   
     
 Rao’s Capital A/cDr 7,500 
 To Murty’s Capital A/c   4,500
 To Shah’s Capital A/c   3,000
 (Being C’s share of goodwill adjusted with his capital account )   
     

Working Note: –

Goodwill in the books  = 10,000

Murty will get a share of Goodwill=10,000X3
5
 =6,000
 
Shah will get a share of Goodwill=10,000X2
5
 =4,000

 

 

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

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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