Question 6 Chapter 4 – Unimax Class 12 Part 1 – 2021

Question 6 Chapter 4 - Unimax Class 12 Part 1 - 2021

Question 6 Chapter 4 – Unimax Class 12 Part 1

6. Gold, Silver and Copper are partners in a firm sharing profits equally. They have decided to share profit in future in the ratio of 2 : 3 : 5. For this purpose the goodwill of the firm is valued at Rs. 150000. Record the necessary Journal entry to give effect to the new arrangement.
(a) When Goodwill is adjusted through Partner’s Capital Accounts.
(b) When Goodwill Account is raised and written off.

The solution of Question 6 Chapter 4 – Unimax Class 12 Part 1:

Working Note :

Old Share New Share Difference
Gold         1/3 2/10 1/3_2/10=4/30  (Sacrifice)
Silver        1/3 3/10 1/3_3/10=1/30  (Sacrifice)
Copper     1/3 5/10 1/3_5/10=[5/30] (Gain)

Copper will pay to Gold & Silver their shares of goodwill sacrificed by them.
Gold will get : Rs. 150000 x 4/30 = Rs. 20000
Silver will get : Rs. 150000 x 1/30 = Rs. 5000
Copper will pay total amount to gold & silver = 150000 x 5/30 = Rs. 25000

Journal

Date Particulars   L.F. Debit Credit
  Copper’s Capital A/c Dr.   25,000  
     To Gold’s Capital A/c       20,000
     To Silver’s Capital A/c       5,000
  (Being adjustment entry Passed for treatment of Goodwill on change in Profit sharing ratio)        

What is Partnership – Meaning and its Types

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

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)

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

 

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