Question 43 Chapter 5 of +2-A
43. Bhuwan and Shivam were partners in a firm sharing profits in the ratio of 3 : 2. Their capitals were 50,000 and 75,000 respectively. They admitted Atul on 1st April, 2018 as a new partner for 1/4th share in future profits. Atul brought 75,000 as his capital. Calculate the value of goodwill of the firm and record necessary Journal entries for the above transactions on
Atul’s admission.
The solution of Question 43 Chapter 5 of +2-A: –
| Date | Particulars |
L.F. | Debit | Credit | |
| Bank A/c | Dr | 75,000 | |||
| To Atul’s Capital A/c | 75,000 | ||||
| (Being received Atul’s share of capital account) | |||||
| Atul’s Current A/c | Dr | 25,000 | |||
| To Bhuwan’s Capital A/c | 15,000 | ||||
| To Shivam’s Capital A/c | 10,000 | ||||
| (Being for goodwill distributed in sacrificing ratio of 3:2) | |||||
Working Note: –
Total Capital of the firm on the Basis of Atul’s Capital
Total Capital of the firm = Atul’s Capital * Reciprocal of his share
| = | 75,000 | * | 4 | |
| 1 | ||||
| = | 3,00,000 |
Actual Capital of Firm = Capital of Old Partners + Incoming Partner’s Capital
| = | 50,000+ 75,000+ 75,000 | |
| = | 2,00,000 |
| Goodwill | = | Total Capital of the firm on basis of Charu’s Capital |
– Actual Capital of Firm |
| = | 3,00,000 | -2,00,000 | |
| = | 1,00,000 |
| Atul’s Share of Goodwill | = | Firm’s Goodwill x | Share of E’s |
| = | 1,00,000 | X | 1 | |
| 4 | ||||
| = | 25,000 |
Sacrificing Ratio of Bhuwan and Shivam = 3 : 2
| Bhuwan will get Share of Goodwill | = | Atul’s Goodwill X | Sacrifice share of Bhuwan |
| = | 25,000 | X | 3 | |
| 5 | ||||
| = | 15,000 |
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| Shivam will get Share of Goodwill | = | Atul’s Goodwill X | Sacrifice share of Shivam |
| = | 25,000 | X | 2 | |
| 5 | ||||
| = | 10,000 |
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. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
