DK Goel Solutions Vol 1 Chapter 2 Change in Profit Sharing Ratio Among the Existing Partners

DK Goel Accountancy Class 12 Solutions Chapter 2 Change in Profit Sharing Ratio Among the Existing Partners which is outlined by expert Accountancy teachers from the latest version of DK Goel Accountancy Class 12 textbook solutions. We at BYJU’S provide DK Goel Solutions to assist students to comprehend all the theories in particular. There are numerous concepts in Accountancy, but the concepts of Admission of a partner, Accounting Ratios and Cash Flow Statement (As per AS – 3 Revised) is required.

DK Goel Solutions Class 12 – Chapter 2 – Part A

Question 1

Charu and Divya are partners in a firm. Charu was to get a commission of 10% on the net profits before charging any commission. However, Divya was to get a commission of 10% on the net profits after charging all commissions. Fill in the missing figure in the following Profit and Loss Appropriation Account of the year ended 31st March 2018.

Solution:

Dr. Profit and Loss Appropriation Account

For the year ended 31st March 2018

Cr.
Particular Particular
To Charu’s Commission

(₹….x 10 / 100)

44,000
To Divya’s Commission
To Profit transferred to:

Charu’s Capital A/c

Divya’s Capital A/c

Solution:

Dr. Profit and Loss Appropriation Account

For the year ended 31st March 2018

Cr.
Particular Particular
To Charu’s Commission

(₹4,40,00 x 10 / 100)

44,000 By Profit & Loss A/c 4,40,000
To Divya’s Commission

(₹3,96,00 x 10 / 100)

36,000
To Profit transferred to:
Charu’s Capital A/c 1,80,000

Divya’s Capital A/c 1,80,000

3,60,000

Working Notes:

1. Calculation of profit before charging any commission

Charu’scommission @ 10% on the net profits charging any commission = 44,000

Therefore, total profit before charging any commission = ₹44,000 x 100 / 10 – ₹4,40,000

2. Calculation of Divya’s Commission

Profit after charging Charu’s commission= ₹3,96,000 (₹4,40,000 – ₹44,000)

Commission of Divya = ₹ 3,96,000 x 10/ 110 = ₹36,000

Question 2

The total capital of the firm od Saurabh, Mohit and Nikhil was ₹1,00,000. The net profits for the last 3 years were: 2013-14 ₹40,000; 2014-15 ₹46,000 and 2015-16 ₹52,000. There was an abnormal loss of ₹3,000 in 2014-15. Goodwill of the firm was to be valued at 2 years purchase of the average profits of the last three years. Calculate the goodwill of the firm.

Solution:

Total Profits of last years
2013- 14 40,000
2014-15 (₹46,000 + Abnormal Loss ₹ 3,000) 49,000
2015-16 52,000

Average Profit = ₹1,41,000 / 3 = ₹47,000

Goodwill = Average Profit x Number of year’s purchase

= ₹47,00 x 2 = ₹94,000

Question 3

X, Y, and Z sharing profits and losses in the ratio 1:2:2, decided to share future profits equally with effect from 1st April 2016. On that date, the Profit and Loss Account showed a credit balance of ₹1,20,000. Partners do not want to distriv=bute the profit but prefer to record the change in the profit-sharing ratio by passing an adjustment entry. Yo are required to give the adjusting entry.

Solution:

Old Ration od X, Y, and Z 1/5: 2/5: 2/5

New Ration od X, Y, and Z 1/3: 1/3: 1/3

Sacrifice or Gain:

X= 1/5 – 1/3 = 3-5 / 15 = 2/15 (Gain)

Y= 2/5 – 1/3 = 6-5/ 15 = 1/ 15 (Sacrifice)

Z= 2/5 – 1/3 = 6-5/15 = 1/15 (Sacrifice)

Date Particular L.F Dr. (₹) Cr. (₹)
2016

April 1

X’s Capital A/c (2/15 of 1,20,000) Dr. 16,000
To Y’s Capital A/c (1/5 of 1,20,000) 8,000
To Z’s Capital A/c (1/5 of 1,20,000)

(Adjustment for Profit and Loss Account balance on change in profit sharing ratio.)

8,000

Question 4

A, B, C, and D are partners in firm sharing profits and losses in the ratio of 2:2:1:1. They decided to share profits in future in the ratio of 4:3:2:1. For this purpose goodwill of the firm was valued at ₹1,80,000. There was also a reserve of ₹60,000 in the books of the firm.

Find out the sacrifice and gaining ratio and pass necessary journal entry assuming that partners do not want to distribute the reserve.

Solution:

Value of Goodwill ₹ 1,80,000
Reserve ₹ 60,000
2,40,000

Old Ratio of A, B, C and D 2:2:1:1

New Ratio of A, B, C and D 4:3:1:1

Sacrifice or Gain:

A= 2/6 – 4/10 = 10-12 / 30 = 2/30 (Gain)

B= 2/6 – 3/10 = 10-9/ 30 = 1/30 (Sacrifice)

C= 1/6 – 2/10 = 5-6/ 30 = 1/30 (SAcrifice)

D= 1/6 – 1/10 = 5-3/ 30 = 2/30 (Sacrifice)

Date Particular L.F Dr. (₹) Cr. (₹)
A’s Capital A/c (2/30 of 2,40,000) Dr. 16,000
C’s Capital A/c (1/30 of 2,40,000) Dr. 8,000
To B’s Capital A/c (1/30 of 2,40,000) 8,000
To D’s Capital A/c (2/30 of 2,40,000)

(Adjustment for Goodwill and reserve on change in profit sharing ratio.)

16,000

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