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Question

A, B and C were partners sharing profits in the ratio of 3 : 2 : 1. The firm closes its books on 31st March every year. B died on 30th June, 2018. On his death, Goodwill of the firm was valued at ₹ 6,00,000. B's share in profit or loss till the date of death was to be calculated on the basis of previous year's profit which was ₹ 15,00,000 (Loss). Pass necessary Journal entries for goodwill and his share of loss.


Solution

In the books of the A, B and C

Journal

Date

Particulars

 

L.F.

Debit
Amount

()

Credit
Amount

()

2018

 

 

 

 

 

June 30

A’s Capital A/c (2,00,000 × 3/4)

Dr.

 

1,50,000

 

 

C’s Capital A/c (2,00,000 × 1/4)

Dr.

 

50,000

 

 

  To B’s Capital A/c (WN1)

 

 

 

2,00,000

 

(Being B’s share of goodwill adjusted in gaining ratio 3 : 1)

 

 

 

 

 

 

 

 

 

 

 

B’s Capital A/c (WN2)

Dr.

 

1,25,000

 

 

  To Profit & Loss Suspense A/c

 

 

 

1,25,000

 

(Being B’s Share of loss debited to his Capital)

 

 

 

 

  Working Notes:                              

1. Calculation of B’s Share of Goodwill
Goodwill = 6,00,000
B’s Share of Goodwill = (6,00,000 × 2/6) = 2,00,000

2. Calculation of B’s Share of Loss till the date of his death i.e. 30th June, 2018
Previous year’s loss = 15,00,000
B’s share of loss till the date of death = Previous year’s loss × B’s Share of Loss × Months till the date of his death/12
  = (15,00,000 × 2/6 × 3/12)
  = 1,25,000

Accountancy
TS Grewal Vol. I (2019)
All

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