Question 53 Chapter 5 of +2-Part-1
53. (Hidden Goodwill)David & Bimal are partners in the firm sharing profits & losses in ratio 3:2 . On 31st March , 2018 their balance sheet was as under :
|David||18,000||Less reserve for doubtful debts||400||9,000|
They admitted Chander as a New Partner the new profit sharing ratio became 5: 3: 2 Chander introduced a capital of Rs.16,000. Chander was unable to bring any cash for Goodwill and so it was decided to value the Goodwill on the basis of his share in the profits and the capital contributed by him. The following revaluation were made at the time of Chander’s admission.
(a) Stock had been overvalued by Rs. 750 and furniture by Rs. 500.
(b) Provision for doubtful debts to be increased by Rs. 100.
(c) A creditors for Rs. 2,350 was paid off by Bimal. Privately for which he was not to be reimbursed.
Prepare the Revaluation Account.
Partner’s Capital Account and a Balance Sheet of the new firm on the date of Chander’s admission. Show your working clearly.
The solution of Question 53 Chapter 5 of +2 Part-1: –
|To Stock salary A/c||750||By creditors||2,350|
|To Furniture A/c||500|
|To Provision for doubtful debts||100|
|To profit transferred to|
|– David 3/5||600|
|– Bimal 2/5||400||1,000|
|Partners’ Capital Account|
|By Balance b/d||18,000||12,000|
|By Bank A/c||16,000|
|By Chander’s current A/c (profit)||3,000||3,000|
|By Revaluation A/c||600||400|
|By General reserve||1,800||1,200|
|To Balance c/d||23,400||16,600||16,000|
|David||23,400||Chander’s current A/C||6,000|
|Less reserve for doubtful debts||500||8,900|
WORKING NOTES :
(i)Calculation of Hidden Good will
Total Capital of the firm = Rs.32,000X 5 = Rs. 1,6000
Adjusted Capital of David & Bimal ( before goodwill ) & Chander’s capital
Value of goodwill = 80,000-50,000
= Rs. 30,000
(ii) Premium for goodwill ( chander) = 30,000X 1/5 = Rs 6,000
Journal entry for adjustment of goodwill
|Chander current A/c||Dr||6,000|
|To David capital A/c||3,000|
|To Bimal’s capital A/c||3,000|
SACRIFICING RATIO = 1 : 1
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Also, Check out the solved question of previous Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement