# 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

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

 Date Particulars L.F. Debit Credit Rao’s Capital A/c Dr 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 x C’s share
 = 30,000 X 1 4 = 7,500

Sacrificing Ratio of Murty and Shah = 3:2

 Murty will get a share of Goodwill = C’s Goodwill x Sacrifice share of Murty
 = 7,500 X 3 5 = 4,500
 Shah will get a share of Goodwill = C’s Goodwill x Sacrifice share of Shah
 = 7,500 X 2 5 = 3,000
 Date Particulars L.F. Debit Credit Murty’s Capital A/c Dr. 6,000 Shah’s Capital A/c Dr. 4,000 To Premium for Goodwill A/c 10,000 (Being goodwill written off which is already in the books) Rao’s Capital A/c Dr 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 = 10,000 X 3 5 = 6,000
 Shah will get a share of Goodwill = 10,000 X 2 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)

• 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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