Question 37 Chapter 5 - Unimax Class 12 Part 1 - 2021

Question 37 Chapter 5 – Unimax Class 12 Part 1 – 2021

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The solution of Question 37 Chapter 5 – Unimax Class 12 Part 1

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

37. K, L and M are partners with respective capitals of Rs. 30000, Rs. 20000 and Rs. 10000 and sharing profits in the ratio of 3 : 2 : 1. They agreed to admit N for 1/6th share on the terms that he will bring Rs. 20000 as capital and Rs. 10000 as premium for goodwill, and that M would retain his original share. N paid in his capital money but in respect of premium money he could bring in only Rs. 5000 and in regard to unpaid amount, it was decided that the firm will treat it as loan carrying interest @ 18% per annum. Give journal entries.

The solution of Question 37 Chapter 5 – Unimax Class 12 Part 1

Journal

Date	Particulars		L.F.	Debit	Credit
	Cash a/c	Dr.		20,000
	To A’s Capital a/c				20,000
	(Being capital brought in cash by new partner)
	Cash a/c	Dr.		5,000
	18% Loan a/c			5,000
	To Premium a/c				10,000
	(Being goodwill brought by new partner in cash and remained treated as loan int.)
	Premium a/c	Dr.		10000
	To K’s Capital a/c				6000
	To L’s Capital a/c				4000
	(Being goodwill of new partner credited to old partner’s capital a/c in sacrificing ratio)

Working Note :

If nothing has been mentioned in deed then old partners will sacrifice in their old ratio i.e. 3 : 2. (Here except M’s ratio because he would retain his old share)