Question 46 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 46 Chapter 5 of +2-A

Question 46 Chapter 5 of +2-A

46. Asin and Shreyas are partners in a firm. They admit Ajay as a new partner with 1/5th share in the profits of the firm. Ajay brings 5,00,000 as his share of capital. The value of the total assets of the firm was 15,00,000 and outside liabilities were valued at 5,00,000 on that date. Give necessary Journal entry to record goodwill at the time of Ajay’s admission. Also show your workings.

The solution of Question 46 Chapter 5 of +2-A: –

 

Date Particulars
L.F. Debit Credit
  Ajay’s Current A/c Dr   2,00,000  
  To Asin’s Capital A/c       1,00,000
  To Shreya’s Capital A/c       1,00,000
  (Being for goodwill distributed in equal ratio)        

Total Capital of the firm on the Basis of C’sCapital

Total Capital of the firm = Ajay’s Capital  * Reciprocal of his share

  = 5,00,000 * 5
1
  = 25,00,000
   


Net Worth = Total Assets – Outsiders’ Liabilities – Ajay’s Capital

  = 15,00,000-5,00,000+ 5,00,000
  = 15,00,000

 

Goodwill = Total Capital of the firm
on basis of Cs Capital
– Net Worth
  = 25,00,000 -15,00,000
  = 10,00,000  

 

Ajay’s Share of Goodwill = Firm’s Goodwill  x  Share of Ajay
  = 10,00,000 X 1
2
  = 2,00,000
   

Sacrificing Ratio of Asin and Shreya =- 1 : 1 

Asin’s will get Share of Goodwill = Ajay’s Goodwill  X  Sacrifice share of Asin’s
  = 2,00,000 X 1
2
  = 1,00,000
   

 

Shreya’s will get Share of Goodwill = Ajay’s Goodwill  X  Sacrifice share of Shreya’s
  = 2,00,000 X 1
2
  = 1,00,000
   

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 46 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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