Question 43 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 43 Chapter 5 of +2-A

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
 

 

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)

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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2 Book 1 min - Question 43 Chapter 5 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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