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Question 49 Chapter 5 of +2-A
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49. E and F were partners in a firm sharing profits in the ratio of 3 : 1. They
admitted G as a new partner on 1st April, 2019 for 1/3rd share. It was decided that E, F and G will share future profits equally. G brought 50,000 in cash and machinery valued at 70,000 as premium for goodwill.
Pass necessary Journal entries in the books of the firm.
The solution of Question 49 Chapter 5 of +2-A: –
| Date | Particulars | L.F. | Debit | Credit | |
| Cash A/c | Dr | 50,000 | |||
| Machinery A/c | Dr | 70,000 | |||
| To Premium for Goodwill A/c | 1,20,000 | ||||
| (Being G brought cash Rs 50,000 and Machinery Rs 70,000 for his share of Goodwill) | |||||
| Premium for Goodwill A/c | Dr | 1,20,000 | |||
| To E’s Capital A/c | 1,20,000 | ||||
| (Being G share of goodwill transferred to E’s Capital Account) | |||||
| F’s Capital A/c | Dr | 30,000 | |||
| To E’s Capital A/c | 30,000 | ||||
| (Being G share of goodwill transferred to E’s Capital Account) | |||||
| Old Ratio of E and F | = | 3 : 1 |
| New Ratio of E, F, and G | = | 1 : 1 : 1 |
Sacrificing Share = Old Ratio – New Ratio
| E’s Sacrificing Share | = | 3 | – | 1 |
| 4 | 3 |
| = | 9 – 4 | |
| 12 |
| = | 5 | Sacrifice | |
| 12 |
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| F’s Sacrificing Share | = | 1 | – | 1 |
| 4 | 5 |
| = | 3 – 4 | |
| 12 |
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| = | (-1) | Gain | |
| 12 |
Distribution of G’s share of Goodwill
G’s share of Goodwill = 1,20,000
F gaining the share in the firm’s profit so only E will received the share of goodwill brought by D and he will also receive the share of goodwill from F
| Total Firm’s Goodwill | = | 1,20,000 | X | 3 |
| 1 | ||||
| = | 3,60,000 |
| F’s Share of Goodwill | = | Firm’s Goodwill X | Gaining share of F’s |
| = | 3,60,000 | X | 1 | |
| 12 | ||||
| = | 30,000 |
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
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