# Question 38 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question No.38 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

Question 38 Chapter 5 of +2-A

38. A, B and C are in partnership sharing profits and losses in the ratio of 5 : 4 : 1 respectively. Two new partners D and E are admitted. The profits are now to be shared in the ratio of 3 : 4 : 2 : 2 : 1 respectively. D is to pay 90,000 for his share of Goodwill but E has insufficient cash to pay for Goodwill. Both the new partners introduced 1,20,000 each as their capital. You
are required to pass necessary Journal entries.

## The solution of Question 38 Chapter 5 of +2-A: –

 Date Particulars L.F. Debit Credit Cash A/c Dr 3,30,000 To D’s Capital A/c 1,20,000 To E’s Capital A/c 1,20,000 To Premium for Goodwill A/c 90,000 (Being D and E brought his share of capital and goodwill) C’s Capital A/c Dr 36,000 E’s Capital A/c Dr 45,000 Premium for Goodwill A/c Dr 90,000 To A’s Capital A/c 1,35,000 To B’s Capital A/c 36,000 (Being goodwill adjusted with capital accounts )

### Working Note: –

 Old Ratio of A and B = 5 : 4 : 1 New Ratio of A, B, and C = 3 : 4 : 2 : 2 : 1

 A’s Sacrificing Share = 5 – 3 10 12
 = 30 – 15 60
 = 15 Sacrifice 60

 B’s Sacrificing Share = 4 – 4 10 12
 = 24 – 20 60
 = 4 Sacrifice 60

 C’s Sacrificing Share = 1 – 2 10 12
 = 6 – 10 60
 = (-4) Gain 60

 Sacrificing Ratio of A and B = 15 : 4 60 60 = 15 : 4

 Gaining share of C = 4 60

Distribution of D’s share of Goodwill
D’s share of Goodwill = 90,000
C’s gaining the share in the firm’s profit so only A and B will received the share of goodwill brought by D & E. they will also receive the share of goodwill from C

 Total Firm’s Goodwill = 90,000 X 12 2 = 5,40,000
 C’s Share of Goodwill = Firm’s Goodwill  X Gaining share of C’s
 = 5,40,000 X 4 60 = 36,000

 E’s Share of Goodwill = Firm’s Goodwill  X Share of E’s
 = 5,40,000 X 1 12 = 45,000

Total Goodwill distributed among the sacrificing partners

 = 90,000 + 36,000 + 45,000 = 1,71,000 Sacrificing Ratio of A and B = 15 : 4

 A will get Share of Goodwill = C’s, D’s & E’s Goodwill  X Sacrifice share of A
 = 1,71,000 X 15 19 = 1,35,000

 A will get Share of Goodwill = C’s, D’s & E’s Goodwill  X Sacrifice share of A
 = 1,71,000 X 4 19 = 36,000

### 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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