Question 38 Chapter 5 – Unimax Class 12 Part 1 – 2021

Question 38 Chapter 5 – Unimax Class 12 Part 1 – 2021

38. A and B are partners with capitals of Rs. 26000 and Rs. 22000 respectively. They admit C as a new partner with 1/4th share in the profits of the firm. C brings Rs. 26000 as his share of capital. Pass necessary journal entries regarding goodwill.

The solution of Question 38 Chapter 5 – Unimax Class 12 Part 1

Journal

 Date Particulars L.F. Debit Credit Cash a/c Dr. 26,000 To C’s Capital a/c 26,000 (Being capital brought in cash by new partner) C’s Capital a/c Dr. 7,500 To A’s Capital a/c 3,750 To B’s Capital a/c 3,750 (Being compensation paid by C to A and B for his share of goodwill)

Working Note :
Total Capital = 26000 X 4/1
= Rs. 1,04,000
(Hidden) Share of G. W. = 1,04,000 – (26000 + 22000 + 26000)
= 1,04,000 – 74000
= Rs. 30,000
Share of C’s goodwill = 30,000 X ¼ = Rs. 7,500
If nothing has been mentioned in deed, it is assumed that partners will share profits equally and sacrifice in equal ratio.

What is Partnership – Meaning and its Types

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