TS Grewal Solutions Class 12 Accountancy Vol 1 Chapter 5
TS Grewal Accountancy Class 12 Solutions Chapter 5 – Admission of a partner is considered to be an important concepts to be learnt by the students. Here, we have provided TS Grewal Accountancy solutions for class 12 in a simple and a step by step manner. And which is helpful for the students to score well in their board examinations.
TS Grewal Solutions Class 12 Accountancy Vol 1 Chapter 5 - Admission of a Partner
| Board | CBSE |
| Class | Class 12 |
| Subject | Accountancy |
| Chapter | Chapter 5 |
| Chapter Name | Admission of a partner |
| Number of questions solved | 25 |
| Category | TS Grewal |
Admission of a partner
Question 1
X, Y, and Z are partners sharing profits and losses in the ratio of 5 : 3: 2. They admit A into partnership and give him 1/5th share of profits. Find the new profit-sharing ratio.
Solution:
Old Ratio = X: Y: Z = 5:3:2
1/5 share of profit is provided to A
Let assume the profit share for all partners after the admission of A is 1
So, X, Y, and Z combined share after A’s admission =1 − A’s share
= 1- 15 = 45 (this is the combined share of X, Y, and Z)
New Ratio = Old Ratio X (combined share of X, Y, and Z)
X’s share = 510 X 45 = 2050
Ys share = 310 X 45 = 1250
Z’s share = 210 X 45 = 850
So, the profit sharing ratio between X, Y, Z, and A will be 2050 : 1250 : 850 : 150 or 10 : 6: 4 :5 respectively
Question 2
Ravi and Mukesh are sharing profits in the ratio of 7 : 3. They admit Ashok for 3/7th share in the firm which he takes 2/7th from Ravi and 1/7th from Mukesh. Calculate the new profit-sharing ratio.
Solution:
The old ratio of Ravi and Mukesh is 710 : 310 37 share of profit is admitted by Ashok
Ravi sacrifice 27 in favour of Ashok
Mukesh sacrifice 17 in favour of Ashok
New Ratio = Old Ratio – Sacrificing Ratio
Ravi’s Share = 710 – 27 = 2970
Mukesh’s share = 310 – 17 = 1170
So, the new profit sharing ratio between Ravi, Mukesh, and Ashok will be,
Ravi 2970 : Mukesh 1170 : Ashok 37 = 29:11:370 = 29:11:3
Question 3
A and B are partners sharing profits and losses in the proportion of 7 : 5. They agree to admit C, their manager, into partnership who is to get 1/6th share in the profits. He acquires this share as 1/24th from A and 1/8th from B. Calculate new profit-sharing ratio.
Solution:
The old ratio of A and B = 7:516 share of profit is admitted by C
A sacrifice 124 in favour of C
B sacrifice 18 in favour of C
New Ratio = Old Ratio – Sacrificing Ratio
As Share = 712 – 124 = 1324
B’s share = 512 – 18 = 724
So, the new profit sharing ratio between A, B, and C will be = 1324 : 724 : 16 = 13:7:424 = 13:7:4
Question 4
A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. They admitted D as a new partner for 1/8th share in the profits, which he acquired 1/16th from B and 1/16th from C. Calculate the new profit-sharing ratio of A, B, C and D.
Solution:
The profit-sharing ratio of A, B, and C = 3:2:1
Original share of A = 36
D’s share = 18 (out of which 16 is acquired from B and C each
New share of B = 26 – 116 = 1348
New share of C = 16 – 116 = 548
So, the new profit sharing ratio between A, B, C, and D is = 36 : 1348 : 548 : 18 = 24:13:5:648 = 24:13:5:6
Question 5
Bharati and Astha were partners sharing profits in the ratio of 3 : 2. They admitted Dinkar as a new partner for 1/5th share in the future profits of the firm which he got equally from Bharati and Astha. Calculate the new profit-sharing ratio of Bharati, Astha and Dinkar.
Solution:
The old ratio of Bharati and Astha = 3:2
Dinkar share = 15
Bharati sacrifices = 15 X 12 = 110
Astha sacrifices = 15 X 12 = 110
Bharati’s New Share = 35 – 110 = 6−110 = 510
Astha’s New share = 25 – 110 = 4−110 = 310
Dinkar’s New share = 15 X 22 = 210
So, Bharati : Astha : Dinkar = 5 : 3 : 2
Question 6
X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. Z is admitted as a partner with 1/4 share in profit. Z acquires his share from X and Y in the ratio of 2 : 1. Calculate new profit-sharing ratio.
Solution:
The old ratio of X and Y = 3:214th share of profit is admitted by Z
Sacrificing ratio of X and Y is 2:1
Z acquired share from X = 23 X 14 = 212
Z acquired share from Y = 13 X 14 = 212
New Ratio = Old ratio – Sacrificing ratio
X’s New Share = 35 – 212 = 36−1060 = 2660
Y’s New share = 25 – 12 = 24−560 = 1960
Z’s New share = 14 X 1515 = 1560
So, X : Y : Z = 26 : 19 : 15
Question 7
R and S are partners sharing profits in the ratio of 5 : 3. T joins the firm as a new partner. R gives 1/4th of his share and S gives 1/5th of his share to the new partner. Find out new profit-sharing ratio.
Solution:
The old ratio of R and S = 5 : 3
Sacrificing ratio = Old Ratio X Surrender Ratio
Sacrificing ratio of R and = 58 X 14 = 532
Sacrificing ratio of S and = 38 X 15 = 340
New Ratio = Old Ratio – Sacrificing Ratio
R’s New Share = 58 – 532 = 1532
S’s New share = 38 – 340 = 1532
T’s Share = R’s sacrifice + S’s sacrifice
T’s Share = 532 + 340 = 25+12160 = 37160
New profit sharing ratio between R, S, and T = 1532 : 1532 : 37160 = 75:48:37160 or 75 : 48 : 37
Question 8
Kabir and Farid are partners in a firm sharing profits and losses in the ratio of 7 : 3. Kabir surrenders 2/10th from his share and Farid surrenders 1/10th from his share in favour of Jyoti; the new partner. Calculate new profit-sharing ratio and sacrificing ratio.
Solution:
The old ratio of Kabir : Farid = 7:5
Kabir sacrifice 210 in favour of Jyoti
Farid sacrifice 110 in favour of Jyoti
Jyoti’s share = 210 + 110 = 310
New Ratio = Old Ratio – Sacrificing Ratio
Kabir’s New Share = 710 – 210 = 510
Farid’s New share = 310 – 110 = 210
So, the new profit sharing ratio between Kabir, Farid, and Jyoti will be = 5 : 2 : 3
The Sacrificing ratio of Kabir and Farid is 210 and 110 = 2:1
Question 9
Find New Profit-sharing Ratio:
(i) R and T are partners in a firm sharing profits in the ratio of 3 : 2. S joins the firm. R surrenders 1/4th of his share and T 1/5th of his share in favour of S.
(ii) A and B are partners. They admit C for 1/4th share. In the future, the ratio between A and B would be 2 : 1.
(iii) A and B are partners sharing profits and losses in the ratio of 3 : 2. They admit C for 1/5th share in the profit. C acquires 1/5th of his share from A and 4/5th share from B.
(iv) X, Y and Z are partners in the ratio of 3 : 2 : 1. W joins the firm as a new partner for 1/6th share in profits. Z would retain his original share.
(v) A and B are equal partners. They admit C and D as partners with 1/5th and 1/6th share respectively.
(vi) A and B are partners sharing profits/losses in the ratio of 3 : 2 . C is admitted for 1/4th share. A and B decide to share equally in future.
Solution:
(i) The old ratio of R : T = 7:5
Sacrificing ratio = Old ratio X Surrender ratio
R’s Sacrificing Share = 35 X 14 = 320
T’s Sacrificing Share = 25 X 15 = 225
New Ratio = Old Ratio – Sacrificing Ratio
R’s New Share = 35 – 320 = 920
T’s New share = 25 – 225 = 825
S’s share = R’s sacrificing share + T’s sacrificing share
= 320 + 225 = 23100
So, the new profit sharing ratio between R, T, and S will be = 920 : 825 : 23100 = 45:32:23100 or 45: 32 : 23
(ii) The old ratio of A : B = 1 : 114th profit share is admitted by C
Combined share of A and B = 1- C‘s share = 1- 14 = 34
New ratio = Combined share of A and B X 23
A’s New Share = 34 X 23 = 612
B’s New share = 34 X 13 = 312
New Profit sharing ratio A : B : C = 612 : 312 : 14 = 6:3:3100 = 2 : 1 :1
(iii) The old ratio of A : B = 3 : 215th profit share is admitted by C
A’s sacrifice = C’s share X 15
= 15 X 15 = 125
B’s sacrifices= C’s share X 45
= 15 X 45 = 425
New Ratio = Old Ratio – Sacrificing Ratio
A’s share = 35 – 125 = 15−125= 1425
B’s share = 25 – 425 = 10−425 = 625
New Profit Sharing Ratio = A : B : C = 1425 : 625 : 15 = 14:6:125 = 14 : 6 : 1
(iv) The old ratio of X : Y : Z = 3 : 2 : 116th profit share is admitted by W
After admitting W and combining all the partner’s share , let the share be = 1
X and Y combined share in the new firm = 1 – Z’s share – W’s share
= 1 – 16 – 16 = 46
New Ratio = Old Ratio X combined share of X and Y
X’s share = 35 X 46 = 1230
Y’s share = 25 X 46 = 830
New Profit Sharing Ratio = X : Y : Z : W = 1230 : 830 : 16 : 16 = 12:8:5:530 or 12 : 8 : 5 : 5
(v) The old ratio of A : B = 1:115th profit share is admitted by C16th profit share is admitted by D
After admitting C and D and combining all the partner’s share , let the share be = 1
Combined share of profit of A and B after C and D’s admission = 1 – C’s share – D’s share
A and B combined share after C and D’s admission = 1 – Z’s share – W’s share
= 1 – 15 – 16 = 1930
New Ratio = Old Ratio X combined share of A and B
A’s share = 12 X 1930 = 1960
B’s share = 12 X 1930 = 1960
New Profit Sharing Ratio = A : B : C : D = 1960 : 1960 : 15 : 16 = 19:19:12:1060 or 19 : 19 : 12 : 10
(vi) The old ratio of A : B = 3 : 214th profit share is admitted by C
After admitting C and combining all the partner’s share , let the share be = 1
Combined share of profit of A and B after D’s admission = 1 – C’s share
= 1 – 14 = 34
A and B New Ratio = combined share of A and B X 12
A and B New Ratio = 34 X 12 = 38
New Profit Sharing Ratio = A : B : C = 38 : 38 : 14 = 3:3:28 or 3 : 3 : 2
Question 10
X and Y were partners sharing profits in the ratio of 3 : 2. They admitted P and Q as new partners. X surrendered 1/3rd of his share in favour of P and Y surrendered 1/4th of his share in favour of Q. Calculate new profit-sharing ratio of X, Y, P and Q.
Solution:
The old ratio of X : Y = 3 : 2
Sacrificing ratio = Old ratio X Surrender ratio
X’s Sacrificing Share = 35 X 13 = 315
Y’s Sacrificing Share = 25 X 14 = 220
New Ratio = Old Ratio – Sacrificing Ratio
X’s share = 35 – 315 = 615
Y’s share = 25 – 220 = 620
X sacrificed for P = 315
Y sacrificed for Q = 210
So, the profit sharing ratio between X, Y, P, and Q will be 615 : 620 : 315 : 210 = 24:8:12:660 or 10 : 6: 4 :5 respectively
Question 11
Rakesh and Suresh are sharing profits in the ratio of 4 : 3. Zaheer joins and the new ratio among Rakesh, Suresh and Zaheer is 7 : 4 : 3. Find out the sacrificing ratio.
Solution:
The old ratio of Rakesh : Suresh = 4 : 3
New ratio for Rakesh, Suresh and Zaheer = 7 : 4 : 3
Sacrificing ratio = Old ratio – New ratio
Rakesh’s Share = 47 – 714 = 114
Suresh’s Share = 37 – 414 = 214
So, sacrificing ratio of Rakesh and Suresh = 114 : 214 = 1 : 2
Question 12
A and B are partners sharing profits in the ratio of 3 : 2. C is admitted as a partner. The new profit-sharing ratio among A, B and C is 4 : 3 : 2. Find out the sacrificing ratio.
Solution:
The old ratio A : B = 3 : 2
New ratio for A, B and C = 4 : 3 : 2
Sacrificing ratio = Old ratio – New ratio
A’s Share = 35 – 49 = 745
B’s Share = 25 – 39 = 345
So, sacrificing ratio of A and B = 745 : 345 = 1 : 2
Question 13
A, B and C are partners sharing profits in the ratio of 4 : 3 : 2. D is admitted for 1/3rd share in future profits. What is the sacrificing ratio?
Solution:
Old Ratio = A : B : C = 4 : 3 : 213th profit share is admitted by D
Let A, B, C, and D combined share be 1
So, A, B, and C combined share after D’s admission =1 − D’s share
= 1- 13 = 23
New Ratio = Old Ratio X (combined share of A, B, and C)
A’s share = 49 X 23 = 827
Bs share = 39 X 23 = 627
C’s share = 29 X 23 = 427
Sacrificing ratio = Old ratio – New ratio
A’s share = 49 – 827 = 427
B’s share = 39 – 627 = 327
C’s share = 27 – 427 = 227
So, sacrificing ratio of A : B : C will be 427 : 327 : 227 or 4 : 3 :2
Question 14
A, B, C and D are in partnership sharing profits and losses in the ratio of 36 : 24 : 20 : 20 respectively. E joins the partnership for 20% share and A, B, C and D in future would share profits among themselves as 3/10 : 4/10 : 2/10 : 1/10. Calculate new profit-sharing ratio after E’s admission .
Solution:
Old Ratio = A : B : C : D = 36 : 24 : 20 : 2020100th profit share is admitted by E
Let A, B, C, and D combined share be 1
So, A, B, C, and D combined share after E’s admission =1 − E’s share
= 1- 20100 = 80100
New Ratio = Combined share of A, B, C, and D X Agreed share of A, B, C, and D
A’s share = 80100 X 310 = 24100
B’s share = 80100 X 410 = 32100
C’s share = 80100 X 210 = 16100
D’s share = 80100 X 110 = 8100
New sacrificing ratio of A : B : C : D : E = 24100 : 32100 : 16100 : 8100 : 20100 = 6 : 8 : 4 : 2 : 5
Question 15
X and Y are partners sharing profits and losses in the ratio of 3 : 2. They admit Z into partnership. X gives 1/3rd of his share while Y gives 1/10th from his share to Z. Calculate new profit-sharing ratio and sacrificing ratio.
Solution:
Old Ratio = X : Y = 3 : 2
X’s sacrificing share = 13 X 35 = 315
Y’s sacrificing share = 110
Sacrificing ratio = 315 : 110 or 2 : 1
New share = Old Share – Sacrificed Share
X’s share = 35 – 315 = 615
Y’s share = 25 – 110 = 310
Z’s share = 315 – 110 = 930
New Ratio = 615 : 310 : 930 = 4 : 3 : 3
Question 16
A, B and C are partners sharing profits in the ratio of 2 : 2 : 1. D is admitted as a new partner for 1/6th share. C will retain his original share. Calculate the new profit-sharing ratio and sacrificing ratio.
Solution:
New Profit Sharing Ratio Evaluation
Old Ratio = A : B : C = 2 : 2 : 1
E admitted 16th share and C retained his share 15
Remaining Share = 1- 16 – 15 = 30−5−630 = 1930
A and B will share the other ratio in 2 : 2 old ratio
A’s new share = 1930 X 24 = 38120
B’s new share = 1930 X 24 = 28120
C’s new share = 15 X 2424 = 24120
D’s new share = 16 X 2020 = 20120
Since, the sacrificed ratio is not mentioned it is assumed that A and B sacrificed their share is their old ratio
Sacrificing ratio = Old ratio – New ratio
A’s share = 25 – 1960 = 24−1960 = 560
B’s share = 25 – 1960 = 24−1960 = 560
So, sacrificing ratio of A : B : C is 5 : 5 or 1 : 1
Question 17
A and B are in partnership sharing profits and losses as 3 : 2. C is admitted for 1/4th share. Afterwards D enters for 20 paise in the rupee. Compute profit-sharing ratio of A, B, C and D after D’s admission.
Solution:
Old Ratio = A : B = 3 : 2
C admitted 16th profit share
Let A, B, C, and D combined share be 1
So, A, B, C, and D combined share after E’s admission =1 − E’s share
= 1- 14 = 34
New Ratio = Old ratio X combined share of A and B
A’s share = 35 X 34 = 920
B’s share = 25 X 34 = 620
New profit sharing ratio after admission of C = A : B : C = 920 : 620 : 14 = 9:6:520 or 9 : 6 : 5
After C’s admission the profit sharing ratio will become old ratio when determining the new profit ratio after D’s admission
Ratio before admission of D = A : B : C = 9 : 6 : 5
D admitted 20100th profit share
Let combines share of A, B, and C, after Ds admission be 1
So, A, B, and C combined share after D’s admission =1 − D’s share
= 1- 20100 = 80100
New Ratio = Old ratio X combined share of A, B, and C
A’s share = 920 X 80100 = 72200
B’s share = 620 X 80100 = 48200
C’s share = 520 X 80100 = 40200
So, new profit sharing ratio between A : B : C : D will be 72200 : 48200 : 40200 : 20100 = 9 : 6 : 5 : 5
Question 18
P and Q are partners sharing profits in the ratio of 3 : 2. They admit R into partnership who acquires 1/5th of his share from P and 4/25th share from Q. Calculate New Profit-sharing Ratio and Sacrificing Ratio.
Solution:
Old Ratio P : Q = 3 : 215 of P’s share is acquired by R
Remaining share of P45(1-15 )of his share from Q
If R share 45 = 125
P’s share = 15 X 15 = 125
Q’s share = 425
P’s new share = 35 – 125 = 15−125 = 1425
Q’s new share = 25 – 425 = 10−425 = 625
R’s new share = 15 X 55 = 525
New Share P : Q : R = 14 : 6 :5
Sacrificing ratio = 1 : 4
Question 19
A and B are partners sharing profits and losses in the ratio of 2 : 1. They take C as a partner for 1/5th share. Goodwill Account appears in the books at ₹ 15,000. For the purpose of C’s admission, goodwill of the firm is valued at ₹ 15,000. C is to pay a proportionate amount as premium for goodwill which he pays to A and B privately.
Pass necessary entries.
Solution:
Journal
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| A’s Capital A/c Dr.B’s Capital A/c Dr.To Goodwill A/c(Goodwill written-off betweenA and B in the old ratio of 2:1) | 10,0005,000 | 15,000 |
Note- The goodwill brought by C will not be recorded in the journal books as the amount is paid privately to A and B.
Working Note: Goodwill Written-off Evaluation
Debited A’s capital = 15,000 X 23 = ₹ 10,000
Credited B’s capital = 15,000 X 13 = ₹ 5,000
Question 20
A and B are partners sharing profits and losses in the ratio of 2 : 5. They admit C on the condition that he will bring ₹ 14,000 as his share of goodwill to be distributed between A and B. C’s share in the future profits or losses will be 1/4th. What will be the new profit-sharing ratio and what amount of goodwill brought in by C will be received by A and B?
Solution:
Old ratio A : B = 2 : 5
C admitted 14th profit share
Let A, B, and C combined share be 1
A and B combined share after C’s admission = 1 – C’s share
1- 14 = 34
New ratio = Old ratio X combined share of A and B
A’s share= 27 X 34 = 628
B’s share= 57 X 34 = 1528
New Profit Sharing Ratio = A : B : C = 628 : 1528 : 14 = 6:15:728 = 6 : 15 : 7
C’s Goodwill share distribution
C’s goodwill share = ₹ 14,000
A will receive = 14,000 X 27 = ₹ 4,000
B will receive = 14,000 X 57 = ₹ 10,000
Question 21
A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. A new partner C is admitted. A surrenders 1/5th of his share and B surrenders 2/5th of his share and B surrenders 2/5th of his share in favour of C. For the purpose of C’s admission, goodwill of the firm is valued at ₹ 75,000 and C brings in his share of goodwill in cash which is retained in the firm’s books. Journalise the above transactions.
Solution:
| Date | Particulars | L.F. | Debit ₹ | Credit ₹ | |
| Cash A/c | Dr. | 21,000 | |||
| To Premium for Goodwill A/c | 21,000 | ||||
| (Premium Goodwill brought by C) | |||||
| Premium for Goodwill A/c | Dr. | 21,000 | |||
| To A’s Capital A/c | 9,000 | ||||
| To B’s Capital A/c | 12,000 | ||||
| (Distributed Goodwill Premium brought by C between A and B in sacrificing ratio 3:4) |
Old ratio A : B = 3 : 2
A sacrifices = 35 X 15 = 325
B sacrifices = 25 X 25 = 425
Sacrificing ratio of A : B = 325 : 425 = 3 : 4
New ratio – Old ratio – Sacrificing ratio
A’s new ratio share = 35 – 325 = 1225
B’s new ratio share = 25 – 425 = 625
C’s new ratio share = A sacrifice + B sacrifice = 325 + 425 = 725
So, New ratio A : B : C = 12 : 6 : 7
Goodwill premium bought by C= 75,000 X 725 = 21, 000
Goodwill premium distribution
Goodwill of A = 21,000 X 37 = 9, 000
Goodwill of B = 21,000 X 47 = 12, 000
Question 22
Give Journal entries to record the following arrangements in the books of the firm:
(a) B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium (goodwill) of ₹ 2,000 for 1/4th share of the profits, shares shares of B and C remain as before.
(b) B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium of ₹ 2,100 for 1/4th share of profits which he acquires 1/6th from B and 1/12th from C.
Solution:
(a)
| Journal | |||||
| Date | Particulars | L.F. | Debit ₹ | Credit ₹ | |
| Cash A/c | Dr. | 2,000 | |||
| To Premium for Goodwill A/c | 2,000 | ||||
| (Goodwill Premium brought by D) | |||||
| Premium for Goodwill A/c | Dr. | 2,000 | |||
| To B’s Capital A/c | 1,200 | ||||
| To C’s Capital A/c | 800 | ||||
| (Distributed Goodwill Premium between B and C in sacrificing ratio 3:2) |
Working Note: Distribution of goodwill premium
Goodwill of B = 2,000 X 35 = 1,200
Goodwill of C = 2,000 X 25 = 800
(b)
| Journal | |||||
| Date | Particulars | L.F. | Debit ₹ | Credit ₹ | |
| Cash A/c | Dr. | 2,100 | |||
| To Premium for Goodwill A/c | 2,100 | ||||
| (Goodwill share bought by D in cash) | |||||
| Premium for Goodwill A/c | Dr. | 2,100 | |||
| To B’s Capital A/c | 1,400 | ||||
| To C’s Capital A/c | 700 | ||||
| (Distributed Goodwill Premium between B and C in sacrificing Ratio 2:1) |
Working Note 1 : Distribution of goodwill premium
Sacrificing ratio = B : C = latex]\frac{1}{6}\) : latex]\frac{1}{12}\) = 2 : 1
Working Note 2 : Distribution of goodwill premium
Goodwill of B = 2,100 X 23 = 1,400
Goodwill of C = 2,100 X 15 = 700
Question 23
B and C are in partnership sharing profits and losses as 3 : 1. They admited D into the firm, D pays premium of ₹ 15,000 for 1/3rd share of the profits. As between themselves, B and C agree to share future profits and losses equally. Draft Journal entries showing appropriations of the premium money.
Solution:
| Journal | |||||
| Date | Particulars | L.F. | Debit ₹ | Credit ₹ | |
| Cash A/c | Dr. | 15,000 | |||
| To Premium for Goodwill A/c | 15,000 | ||||
| (Goodwill share bought by D in cash) | |||||
| Premium for Goodwill A/c | Dr. | 15,000 | |||
| To B’s Capital A/c | 15,000 | ||||
| (Goodwill premium transferred to B’s Capital) | |||||
| C’s Capital A/c | Dr. | 3,750 | |||
| To B’s Capital A/c | 3,750 | ||||
| (Being charges goodwill from C’s capital A/c due to his gain in profit sharing) |
Working Notes 1: Sacrificing Ratio Evaluation
Let B and C combined share after D’s be 1
B and C combined share after D’s admission = 1 – D’s share
1- 13 = 23
Profit sharing of B and C after D’s admission = 23 X 12 = 13 each
Sacrificing ratio = New ratio – New ratio
B’s share = 34 – 13 = 512 (sacrificing)
C’s share = 14 – 13 = −112 (gain)
Working Notes 2:
C gains in the new firm. So, C’s goodwill gain will be debited from his capital A/c and given to the sacrificing partner B.
Firm’s goodwill = Goodwill premium brought by D X Reciprocal of D’s share
= 15,000 X 31 = ₹ 45,000
C’s share of Goodwill gain = Firm goodwill X Share of gain
= 45,000 X 112 = ₹ 3,750
Question 24
M and J are partners in a firm sharing profits in the ratio of 3 : 2. They admit R as a new partner. The new profit-sharing ratio between M, J and R will be 5 : 3 : 2. R brought in ₹ 25,000 for his share of premium for goodwill. Pass necessary Journal entries for the treatment of goodwill.
Solution:
| Journal | |||||
| Date | Particulars | L.F. | Debit ₹ | Credit ₹ | |
| Cash A/c | Dr. | 25,000 | |||
| To Premium for Goodwill A/c | 25,000 | ||||
| (Goodwill share bought by C in cash) | |||||
| Premium for Goodwill A/c | Dr. | 25,000 | |||
| To M’s Capital A/c | 12,500 | ||||
| To J’s Capital A/c | 12,500 | ||||
| (Distributed C’s Goodwill share between M and J in their sacrificing ratio) |
Working Notes 1: Sacrificing Ratio Evaluation
Sacrificing ratio = Old ratio – New ratio
M’s sacrificing ratio = 35 – 510 = 110
J’s sacrificing ratio = 25 – 310 = 110
Sacrificing ratio = M : J = 110 : 110 = 1 : 1
Working Notes 2: R’s goodwill share Evaluation
M’s goodwill share = 25,000 X 12 = ₹ 12,500
J’s goodwill share = 25,000 X 12 = ₹ 12,500
So, M and N will receive 12,500 each
Question 25
A and B are in partnership sharing profits and losses in the ratio of 5 : 3. C is admitted as a partner who pays ₹ 40,000 as capital and the necessary amount of goodwill which is valued at ₹ 60,000 for the firm. His share of profits will be 1/5th which he takes 1/10th from A and 1/10th from B.
Give Journal entries and also calculate future profit-sharing ratio of the partners.
Solution:
Journal
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| Cash A/c Dr.To C’s Capital A/cTo Premium for Goodwill A/c(Goodwill share and capital bought by C in cash) | 52,000 | 40,00012,000 | ||
| Premium for Goodwill A/c Dr.To A’s Capital A/cTo B’s Capital A/c(C’s goodwill share distributed between A and B) | 12,000 | 6,0006,000 |
A : B = 110 : 110 = 1 : 1
Working Notes 1 : A and B Sacrificing Ratio
Working Notes 2 : New Profit Sharing Ratio Evaluation
Old ratio of A : B = 5 : 3
New ratio = Old ratio – Sacrificing ratio
A’s share = 58 – 110 = 2140
B’s share = 38 – 110 = 1140
New Profit Sharing Ratio = A : B : C = 2140 : 1140 : 15 = 21:11:840
Working Notes 3 : Distribution of R’s goodwill share Evaluation
A’s goodwill share = 12,000 X 12 = ₹ 6,000
B’s goodwill share = 12,000 X 12 = ₹ 6,000
So, A and B will receive 6,000 each
Related Links
TS Grewal Accountancy Class 12 Solutions Volume 1
TS Grewal Accountancy Class 12 Solutions Volume 2
| Chapter 8- Accounting for Share Capital |
| Chapter 9- Issue of Debentures |
| Chapter 10- Redemption of Debentures |
0 Comments