# 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.Â We at BYJUâ€™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 ofÂ 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 â‚¹50,000 as goodwill out of his share of â‚¹90,000. 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. (â‚¹) Cr. (â‚¹) 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 Câ€™s Current A/c Dr. Dr. 50,000 40,000 To Aâ€™s Capital A/c 60,000 To Bâ€™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 â‚¹60,000 for premium out of his share of a premium of â‚¹1,80,000 for a 1/4th share of profit. Goodwill account appears in the book at â‚¹3,00,000. Give the necessary journal entries.

Solution:

 Journal Entry Date Particulars L.F Dr. (â‚¹) Cr. (â‚¹) Aâ€™s Capital A/c Dr. 1,50,000 Bâ€™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 Câ€™s Current A/c Dr. 48,000 To Aâ€™s Capital A/c 54,000 To Bâ€™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 â‚¹1,20,000 as his capital and â‚¹60,000 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. (â‚¹) Cr. (â‚¹) Bank A/c Dr. 1,80,000 To Zâ€™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 Xâ€™s Capital A/c (Full amount of goodwill /premium transferred to Xâ€™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

Xâ€™s new share = 3/4 x 1/2 = 3/8

Yâ€™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 â‚¹ Assets â‚¹ 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 â‚¹4,00,000 as his capital. Ascertain the amount of goodwill and pass journal entries on the admission of R.

Solution:

 Journal Date Particulars L.F Dr. (â‚¹) Cr. (â‚¹) 2018 1st April Profit and Loss A/c Workmen Compensation Reserve A/c Dr. Dr. 1,30,000 60,000 To Pâ€™s Capital A/c To Qâ€™s Capital A/c (Transfer of accumulated profits to old partners in their old profit sharing ratio) 1,18,750 71,250 Pâ€™s Capital A/c Qâ€™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 Râ€™s Capital A/c (Amount brought in by R as his capital) 4,00,000 Râ€™s Current A/c Dr. 80,000 To Pâ€™s Capital A/c To Qâ€™s Capital A/c (Râ€™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 Râ€™s capital: â‚¹4,00,000 x 3/1 12,00,000 Less: Net worth of new firm: Adjusted capital of P (â‚¹2,50,000 + â‚¹1,18,750 – â‚¹18,750) 3,50,000 Adjusted capital of Q (â‚¹1,50,000 + â‚¹71,250 – â‚¹11,250) 2,10,000 Capital of R 4,00,000 9,60,000 Value of the firmâ€™s goodwill 2,40,000 Râ€™s share of goodwill = â‚¹2,40,000 x 1/3 = â‚¹ 80,000

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 DK Goel Accountancy Solutions Class 12 â€“ Part A (Chapter wise) Chapter 1 Accounting for Partnership Firms â€“ Fundamentals Chapter 2 Change in Profit Sharing Ratio Among the Existing Partners Chapter 4 Retirement or Death of a Partner Chapter 5 Dissolution of a Partnership Firm