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Question 39 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 39 Chapter 5 of +2-A
Question No.39 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

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Question 39 Chapter 5 of +2-A

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39. Mohan and Sohan were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted Ram for 1/4th share on 1st April, 2019. It was agreed that goodwill of the firm will be valued at 3 years’ purchase of the average profit of last 4 years ended 31st March, were 50,000 for 2015-16, 60,000 for 2016-17, 90,000 for 2017-18 and 70,000 for 2018-19. Ram did not bring his share of goodwill premium in cash. Record the necessary Journal entries in the books of the firm on Ram’s admission when:
(a) Goodwill appears in the books at 2,02,500.
(b) Goodwill appears in the books at 2,500.
(c) Goodwill appears in the books at 2,05,000.

The solution of Question 39 Chapter 5 of +2-A: –

(a) Goodwill appears in the books at 2,02,500.

DateParticulars
L.F.DebitCredit
 Mohan’s Capital A/cDr 1,21,500 
 Sohan’s Capital A/cDr 81,000 
 To Goodwill A/c   2,02,500
 (Being goodwill written off which is already in the books)    
 Ram’s Capital A/cDr 50,625 
 To Mohan’s Capital A/c   30,375
 To Sohan’s Capital A/c   20,250
 (Being Ram’s share of goodwill adjusted with his capital account)    

 

(b) Goodwill appears in the books at 2,500.

DateParticulars
L.F.DebitCredit
 Mohan’s Capital A/cDr 1,500 
 Sohan’s Capital A/cDr 1,000 
 To Goodwill A/c   2,500
 (Being goodwill written off which is already in the books)    
 Ram’s Capital A/cDr 50,625 
 To Mohan’s Capital A/c   30,375
 To Sohan’s Capital A/c   20,250
 (Being Ram’s share of goodwill adjusted with his capital account)    

 

(c) Goodwill appears in the books at 2,05,000.

DateParticulars
L.F.DebitCredit
 Mohan’s Capital A/cDr 1,23,000 
 Sohan’s Capital A/cDr 82,000 
 To Goodwill A/c   2,05,000
 (Being goodwill written off which is already in the books)    
 Ram’s Capital A/cDr 50,625 
 To Mohan’s Capital A/c   30,375
 To Sohan’s Capital A/c   20,250
 (Being Ram’s share of goodwill adjusted with his capital account)    

 

Working Note: –

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Average Profit=Total Profit for past given years
Number of years
 =50,000 + 60,000 + 90,000 + 70,000
4
 =2,70,000
4
 =67,500

Number of years’ purchase = 3

Goodwill=Average Profit X Number of years’ purchase
 =67,500 X 3
 =2,02,500 

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Ram’s Share of Goodwill=Firm’s Goodwill  X Share of E’s
 =2,02,500X1
4
 =50,625
  

Sacrificing Ratio of Mohan and Sohan = 3 : 2

Mohan will get Share of Goodwill=Ram’s Goodwill  X Sacrifice share of A
 =50,625X1
12
 =45,000
 

 

A will get Share of Goodwill=C’s, D’s & E’s Goodwill  X Sacrifice share of A
    
 =50,625X3
5
 =30,375

 

Sohan will get Share of Goodwill=Ram’s Goodwill  X Sacrifice share of A
 =1,71,000X2
5
 =20,250  

 

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

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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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