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Question 47 Chapter 5 of +2-A
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47. Verma and Sharma are partners in a firm sharing profits and losses in the
ratio of 5 : 3. They admitted Ghosh as a new partner for 1/5th share of profits. Ghosh is to bring in 20,000 as capital and 4,000 as his share of goodwill premium. Give the necessary Journal entries:
(a) When the amount of goodwill is retained in the business.
(b) When the amount of goodwill is fully withdrawn.
(c) When 50% of the amount of goodwill is withdrawn.
(d) When goodwill is paid privately.
The solution of Question 47 Chapter 5 of +2-A: –
(a) When the amount of goodwill is retained in the business.
| Date | Particulars | L.F. | Debit | Credit | |
| Cash A/c | Dr | 24,000 | |||
| To Ghosh’s Capital A/c | 20,000 | ||||
| To Premium for Goodwill A/c | 4,000 | ||||
| (Being share of capital and goodwill brought by the Ghosh) | |||||
| Premium for Goodwill A/c | Dr | 4,000 | |||
| To Verma’s Capital A/c | 2,500 | ||||
| To Sharma’s Capital A/c | 1,500 | ||||
| (Being goodwill distributed among the old partners) | |||||
(b) When the amount of goodwill is fully withdrawn.
| Date | Particulars | L.F. | Debit | Credit | |
| Cash A/c | Dr | 24,000 | |||
| To Ghosh’s Capital A/c | 20,000 | ||||
| To Premium for Goodwill A/c | 4,000 | ||||
| (Being share of capital and goodwill brought by the Ghosh) | |||||
| Premium for Goodwill A/c | Dr | 4,000 | |||
| To Verma’s Capital A/c | 2,500 | ||||
| To Sharma’s Capital A/c | 1,500 | ||||
| (Being goodwill distributed among the old partners) | |||||
| Verma’s Capital A/c | Dr | 2,500 | |||
| Sharma’s Capital A/c | Dr | 1,500 | |||
| To Cash A/c | 4,000 | ||||
| (Being Amount of Premium for Goodwill withdrawn by Old Partners) | |||||
(c) When 50% of the amount of goodwill is withdrawn.
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| Date | Particulars | L.F. | Debit | Credit | |
| Cash A/c | Dr | 24,000 | |||
| To Ghosh’s Capital A/c | 20,000 | ||||
| To Premium for Goodwill A/c | 4,000 | ||||
| (Being share of capital and goodwill brought by the Ghosh) | |||||
| Premium for Goodwill A/c | Dr | 4,000 | |||
| To Verma’s Capital A/c | 2,500 | ||||
| To Sharma’s Capital A/c | 1,500 | ||||
| (Being goodwill distributed among the old partners) | |||||
| Verma’s Capital A/c | Dr | 1,250 | |||
| Sharma’s Capital A/c | Dr | 750 | |||
| To Cash A/c | 2,000 | ||||
| (Being Amount of Premium for Goodwill withdrawn by Old Partners) | |||||
(d) When goodwill is paid privately.
No Journal entry will be recorded in the books because goodwill paid privately.
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
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