DK Goel Accountancy Class 12 Solutions Chapter 3 Admission of a partner which is outlined by expert Accountancy teachers from the latest version of DK Goel Accountancy Class 12 textbook solutions. We at BYJUâ€™S provide DK Goel Solutions to assist students to comprehend all the theories in particular. Click here to learn more concepts in Accountancy, however, 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 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 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 | ||||
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 | ||||
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 |