DK Goel Solutions for Class 12 Accountancy Vol 1 Chapter 3 Admission of a partner

DK Goel Accountancy Class 12 Solutions Chapter 3 Admission of a Partner are created by expert Accountancy teachers from the latest version of DK Goel Class 12 Accountancy books. We at BYJU’S provide DK Goel Solutions to assist students in developing a comprehensive understanding of all the theories. There are numerous concepts in Accountancy. However, the concepts of Admission of a partner, Accounting Ratios and Cash Flow Statement (As per AS – 3 Revised) is essential.

DK Goel Solutions Class 12 – Chapter 3 – Part A

Question 1

A and B are partners sharing profits in the ratio of 3:2. They admit C into the company for 1/4th share in profit which he takes 1/6th from A and 1/12th from B. However, C brings ₹50,000 as goodwill out of his share of ₹90,000. No goodwill account appears in the books of the company. Pass necessary journal entries to record this arrangement.

Solution:

Journal
Date Particulars L.F Dr. (₹) Cr. (₹)
Bank Account Dr. 50,000
To Premium for Goodwill A/c

(A part of his share of goodwill/premium brought in by C)

50,000
Premium for Goodwill A/c

C’s Current A/c

Dr.

Dr.

50,000

40,000

To A’s Capital A/c 60,000
To B’s Capital A/c

(Goodwill/premium credited to A and B in their sacrificing ratio, i.e, 2:1)

30,000

Question 2

A and B are partners sharing profits equally. They admit C into partnership, C paying only ₹60,000 for premium out of his share of a premium of ₹1,80,000 for a 1/4th share of profit. Goodwill account appears in the book at ₹3,00,000. Give the necessary journal entries.

Solution:

Journal Entry
Date Particulars L.F Dr. (₹) Cr. (₹)
A’s Capital A/c Dr. 1,50,000
B’s Capital A/c Dr. 1,50,000
To Goodwill A/c

(The existing goodwill is written off)

3,00,000
Bank A/c Dr. 60,000
To Premium for Goodwill A/c

(A part of his share of goodwill/premium brought in by C)

60,000
The premium for Goodwill A/c Dr. 60,000
C’s Current A/c Dr. 48,000
To A’s Capital A/c 54,000
To B’s Capital A/c

(The goodwill/premium credited to old partners in their sacrificing ratio i.e 1:1)

54,000

Question 3

X and Y are partners in a company. Their profit sharing ratio is 5:3. They admit Z into a partnership for 1/4th share. As between themselves, A and B decide to share profits equally in the future. C brings in ₹1,20,000 as his capital and ₹60,000 as premium. Calculate the sacrificing ratio and record the necessary journal entries on the assumption that the amount of premium brought in by C is retained in the business.

Solution:

Journal
Date Particulars L.F Dr. (₹) Cr. (₹)
Bank A/c Dr. 1,80,000
To Z’s Capital A/c 1,20,000
To Premium for Goodwill A/c

(The amount of goodwill/premium brought in cash)

60,000
The premium for Goodwill A/c Dr. 60,000
To X’s Capital A/c

(Full amount of goodwill /premium transferred to X’s Capital A/c, as he alone has sacrificed

60,000

Calculation of new profit sharing ratio: C takes a 1/4th share out of 1.

Thus, the remaining profit is 3/4; This is divided equally between A and B

X’s new share = 3/4 x 1/2 = 3/8

Y’s new share = 3/4 x 1/2 = 3/8

Sacrificed made by X = 5/8 – 3/8 =2/8

Sacrificed made by Y = 3/8 – 3/8 =0

Hence, X alone has sacrificed and as such he alone will be entitled to the full amount of goodwill premium brought in by Z.

Question 4

Balance Sheet of P and Q who share profits and losses in the ratio of 5:3 as at 31st March, 2018 was a follows.

Liabilities Assets
Capital Accounts: Land & Building 3,00,000
P

Q

Profit & Loss A/c

Workmen Compensation Reserve

Sundry Creditors

2,50,000

1,50,000

1,30,000

60,000

50,000

Machinery

Stock

Debtors

Cash

Advertisement Expenditure

(Deferred Revenue)

2,00,000

70,000

30,000

10,000

30,000

6,40,000 6,40,000

They admit R as a partner for 1/3 rd share in the profits of the firm which he acquires from P and Q in the ratio of 3:1. R brings in ₹4,00,000 as his capital. Ascertain the amount of goodwill and pass journal entries on the admission of R.

Solution:

Journal
Date Particulars L.F Dr. (₹) Cr. (₹)
2018

1st April

Profit and Loss A/c

Workmen Compensation Reserve A/c

Dr.

Dr.

1,30,000

60,000

To P’s Capital A/c

To Q’s Capital A/c

(Transfer of accumulated profits to old partners in their old profit sharing ratio)

1,18,750

71,250

P’s Capital A/c

Q’s Capital A/c

Dr.

Dr.

18,750

11,250

To Advertisement Expenditure A/c

(Transfer of accumulated loss to old partners in their old profit sharing ratio)

30,000
Bank A/c Dr. 4,00,000
To R’s Capital A/c

(Amount brought in by R as his capital)

4,00,000
R’s Current A/c Dr. 80,000
To P’s Capital A/c

To Q’s Capital A/c

(R’s share of goodwill credited to P and Q in their sacrificing ratio 3:1)

60,000

20,000

Working Note:

Calculation of hidden goodwill

Total of Capital of the new firm on the basis of R’s capital: ₹4,00,000 x 3/1 12,00,000
Less: Net worth of new firm:
Adjusted capital of P
(₹2,50,000 + ₹1,18,750 – ₹18,750) 3,50,000
Adjusted capital of Q
(₹1,50,000 + ₹71,250 – ₹11,250) 2,10,000
Capital of R 4,00,000 9,60,000
Value of the firm’s goodwill 2,40,000
R’s share of goodwill = ₹2,40,000 x 1/3 = ₹ 80,000

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3 Comments

  1. Nice application this helps a lot to me and many other students

  2. Awesome

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