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प्रश्न
Verma and Sharma are partners in a firm sharing profits and losses in the ratio of 5 : 3. They admitted Ghosh as a new partner for 1/5th share of profits. Ghosh is to bring in ₹ 20,000 as capital and ₹ 4,000 as his share of goodwill premium. Give the necessary Journal entries:
(a) When the amount of goodwill is retained in the business.
(b) When the amount of goodwill is fully withdrawn.
(c) When 50% of the amount of goodwill is withdrawn.
(d) When goodwill is paid privately.
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उत्तर
|
Journal Entries |
|||||
|
S.No. |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Case (a) |
|||||
|
Cash A/c |
Dr. |
24,000 |
|||
|
To Ghosh's Capital A/c |
20,000 |
||||
|
To Premium for Goodwill A/c |
4,000 |
||||
|
(Capital and Goodwill his share broughtby Ghosh) |
|||||
|
Premium for Godwill A/c |
Dr. |
4,000 |
|||
|
To Verma's Capital A/c |
2,500 |
||||
|
To Sharma's Capital A/c |
1,500 |
||||
|
(Goodwill brought by Ghosh credited to Old Partnersin Sacrificing ratio) |
|||||
| Case (b) |
Cash A/c |
Dr. |
24,000 |
||
|
To Ghosh Capital A/c |
20,000 |
||||
|
To Premium for Goodwill A/c |
4,000 |
||||
|
(Capital and Goodwill brought by Ghosh for (1/5)share of profit) |
|||||
|
Premium for Goodwill A/c |
Dr. |
4,000 |
|||
|
To Verma's Capital A/c |
2,500 |
||||
|
To Sharma's Capital A/c |
1,500 |
||||
|
(Goodwill brought by Ghosh credited in Old Partner in Sacrificing Ratio) |
|||||
|
Verma's Capital A/c |
Dr. |
2,500 |
|||
|
Sharma's Capital A/c |
Dr. |
1,500 |
|||
|
To Cash A/c |
4,000 |
||||
|
(Amount of Premium for Goodwill withdrawn byOld Partners) |
|||||
| Case (c) |
Cash A/c |
Dr. |
24,000 |
||
|
To Ghosh's Capital A/c |
20,000 |
||||
|
To Premium for Goodwill A/c |
4,000 |
||||
| (Capital and Goodwill brought by Ghosh for (1/5)share of profit) | |||||
|
Premium for Goodwill A/c |
Dr. |
4,000 |
|||
|
To Verma's Capital A/c |
2,500 |
||||
|
To Sharma's Capital A/c |
1,500 |
||||
|
(Premium for Goodwill credited to Old Partner's Capital Account in sacrificing ratio) |
|||||
|
Verma's Capital A/c |
Dr. |
1,250 |
|||
|
Sharma's Capital A/c |
750 |
||||
|
To Cash A/c |
2,000 |
||||
|
(Half of the amount of premium for goodwill withdrawn by Old partners) |
|||||
| Case (d) | No entry: Goodwill was not brought into firm | ||||
APPEARS IN
संबंधित प्रश्न
On1.4.2014 the Balance Sheet of Anant, Sampat and Gunvant was as follows :
| Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Sundry Creditors General Reserve Capital Reserve Anant 30,000 Sampat 15,000 Gunvant 15,000 |
9,000 9,600
60,000 |
Bank Bills Receivables Stock Tools Furniture
|
15,600 18,000 18,000 3,000 24,000
|
| 78,600 | 78,600 |
Gunvant died on 30.9.2014. Under the terms of Partnership Deed, the executors of the deceased partner were entitled to:
(a) The amount standing to the credit of partner's capital account.
(b) Interest on capital @12% per annum.
(c) A share of goodwill on the basis of twice the average of past three years profits.
(d) A share of profit from the closing of last financial year to the date of death on the basis of last year's profit.
The profits of the last three years were as follows:
| Year | Profit |
| 2011 - 2012 | 18.000 |
| 2012 - 2013 | 21,000 |
| 2013 - 2014 | 24,000 |
The firm closes its books on 31st March every year. Partners share profits in the ratio of their capitals.
Prepare Gunvant's Capital Account to be presented to his executors
Joshi, Pandey and Agarwal were partners in a firm sharing profits in the ratio of 2:2:1. On 31.3.2014, their Balance Sheet was as follows:
| Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Creditors Bills Payable Agarwal's Loan Capitals Joshi 2,10,000 Pandey 2,04,000 |
51,000 36,000 84,000
4,14,000 |
Cash Debtors Bills payable Furniture Machinery Agarwal’s Capital |
24,000 39,000 27,000 81,000 3,75,000 39,000 |
| 5,85,000 | 5,85,000 |
On 31.12.2014, Agarwal died. The partnership deed provided for the following to the executors of the deceased partner:
(a) His share in the goodwill of the firm, calculated on the basis of three year's purchase of the average profits of the last four years. The profits of the last four years were Rs 2,70,000; Rs 3,00,000; Rs 5,40,000 and Rs 8,10,000 respectively.
(b) His share in the profits of the firm till the date of his death, calculated on the basis of the average profits of the last four years.
(c) Interest @12% per annum on the credit balance, if any, in his Capital account.
(d) Interest on his loan @12% per annum.
Prepare Agarwal's Capital Account to be presented to his executors.
How does the market situation affect the value of goodwill of a firm?
How does the nature of business affect the value of goodwill of a firm?
State 'True' or 'False'
The goodwill brought in by a new partner is shared by the old partners.
State 'True' or 'False'
The goodwill brought in by the new partner is shared by all partners.
State 'True' or 'False'
The new partner must pay his share of goodwill in cash only.
State ‘True’ or ‘False’:
If the goodwill account raised up, goodwill account is debited.
State True or False with reason.
When goodwill is written off, goodwill amount is debited.
Asin and Shreyas are partners in a firm. They admit Ajay as a new partner with 1/5th share in the profits of the firm. Ajay brings ₹ 5,00,000 as his share of capital. The value of the total assets of the firm was ₹ 15,00,000 and outside liabilities were valued at ₹ 5,00,000 on that date. Give the necessary Journal entry to record goodwill at the time of Ajay's admission. Also show your workings.
Madan and Gopal are partners sharing profits in the ratio of 3 : 2. They admit Sooraj for 1/3rd share in profits on 1st April, 2019. They also decide to share future profits equally. Goodwill of the firm was valued at ₹ 5,50,000. Goodwill existed in the books of account at ₹ 1,00,000, which the partners decide to carry forward.
Sooraj is unable to bring his share of goodwill. Pass the necessary Journal entries on admission of Sooraj, if:
(a) Goodwill is not to be raised and written off; and
(b) Goodwill is to be raised and written off.
A and B are partners sharing profits in the ratio of 3 : 2. Their books show goodwill at ₹ 2,000. C is admitted as partner for 1/4th share of profits and brings in ₹ 10,000 as his capital but is not able to bring in cash for his share of goodwill ₹ 3,000. Draft Journal entries.
A and B are partners sharing profits in the ratio of 2 : 1. They admit C for a `1/4`th share in profits. C brings in ₹ 30,000 for his capital and ₹ 8,000 out of his share of ₹ 10,000 for goodwill. Before admission, goodwill appeared in books at ₹ 18,000. Give Journal entries to give effect to the above arrangement.
Hints:
- Goodwill of ₹ 18,000 written off by A and B in 2 : 1.
- Goodwill of ₹ 8,000 brought in cash by C will be credited to the Premium for Goodwill A/c.
- Premium for Goodwill A/c will be debited by ₹ 8,000 and C’s Current A/c will be debited by ₹ 2,000 and the Capital Accounts of A and B will be credited in 2 : 1.
Anu and Bhagwan were partners in a firm sharing profits in the ratio of 3 : 1. Goodwill appeared in the books at ₹ 4,40,000. Raja was admitted to the partnership. The new profit-sharing ratio among Anu, Bhagwan and Raja was 2 : 2 : 1. Raja brought ₹ 1,00,000 for his capital and necessary cash for his goodwill premium. Goodwill of the firm was valued at ₹ 2,50,000. Record necessary Journal entries in the books of the firm for the above transactions.
M and J are partners in a firm sharing profits in the ratio of 3 : 2. They admit R as a new partner. The new profit-sharing ratio between M, J and R will be 5 : 3 : 2. R brought in ₹ 25,000 for his share of premium for goodwill. Pass necessary Journal entries for the treatment of goodwill.
Keith, Bina, and Veena were partners in firm sharing profits and losses equally. Their balance sheet as on 31-3-2019 was as follows:
|
Balance Sheet of Keith, Bina, and Veena as on 31-3-2019 |
||||
| Liabilities |
Amount (₹) |
Amount (₹) |
Assets | Amount (₹) |
| Capitals: |
|
3,25,000 |
Plant and Machinery | 2,40,000 |
| Keith | 1,50,000 | Stock | 60,000 | |
| Bina | 1,00,000 | Sundry debtors | 35,000 | |
| Veena |
75,000 |
Cash at bank | 50,000 | |
| General Reserve |
|
30,000 |
||
| Sundry creditors |
|
30,000 |
||
| 3,85,000 | 3,85,000 | |||
Veena died on 30th June 2019. According to the partnership deed, the executors of the deceased partner were entitled to :
- Balance in the capital account
- Salary till the date of death @ ₹ 25,000 per annum.
- Share of goodwill calculated on the basis of twice the average profits of the past three years.
- Share of profit from the closure of the last accounting year till the date of death on the basis of the average of three completed years profits before death.
- Profits for 2016-17, 2017-18 and 2018-19 were ₹ 1,20,000, ₹ 90,000 and ₹ 1,50,000 respectively.
Veena withdrew ₹ 15,000 on 1st June 2019 for paying her daughter’s school fees.
Prepare Veena’s capital account to be rendered to her executors.
When goodwill is withdrawn by the partner ________ account is credited.
Write a word/phrase/term which can substitute the following statement.
Reputation of business measured in terms of money.
State True or False with reason.
When goodwill is paid privately to the partners, it is not recorded in the books.
State True or False with reason.
Cash/ Bank Account is credited when goodwill is withdrawn by the old partners.
State the ratio in which the old partner’s Capital A/c will be credited for goodwill when the new partner does not bring his share of goodwill in cash?
Amount brought by a new partner for his share in goodwill is known as _____________.
Value of reputation of the firm is:
When there is no Goodwill Account in the books and goodwill is raised, ____________ account will be debited.
Madhav, Madhusudan and Mukund were partners in Jaganath Associates. They decided to dissolve the firm on 31st March 2021. Pass necessary journal entries for the following transactions after various assets (other than cash) and third-party liabilities have been transferred to realization account:
- Old machine fully written off was sold for ₹ 42,000 while a payment of ₹ 6,000 is made to bank for a bill discounted being dishonoured.
- Madhusudan accepted an unrecorded asset of ₹80,000 at ₹75,000 and the balance through cheque, against the payment of his loan to the firm of ₹1,00,000.
- Stock of book value of ₹30,000 was taken by Madhav, Madhusudan and Mukund in their profit sharing ratio.
- The firm had paid realization expenses amounting to ₹5,000 on behalf of Mukund.
- There was a vehicle loan of ₹ 2,00,000 which was paid by surrender of asset to the bank at an agreed value of ₹ 1,40,000 and the shortfall was met from firm’s bank account.
Jaya, Kirti, Ekta and Shewta are partners in the firm sharing profits and losses in the ratio of 2:1:2:1. On Jaya's retirement, the goodwill of the firm is valued at Rs. 36,000. Kirti, Ekta and Shewta decided to share future profits equally. What will be the necessary journal entry for the treatment of goodwill without opening a 'Goodwill Account'.
When the incoming partner brings his share of premium for goodwill in cash, it is adjusted by crediting to ______.
Govind, Hari and Pratap are partners. On the retirement of Govind, the goodwill already appears on the Balance Sheet at ₹24,000. The goodwill will be written off ______
Fill in the blank.
______ = `("Total Profit")/("Number of Years")`
Calculate goodwill of a firm on the basis of three years purchases of the Weighted Average Profits of the last four years. The profits of the last four years were:
| Years (ending 31st march) | 2020 | 2021 | 2022 | 2023 |
| Amount | 28,000 | 27,000 | 46,900 | 53,810 |
- On 1st April, 2020 a major plant repair was undertaken for ₹ 10,000 which was charged to revenue. The said sum is to be capitalized for goodwill calculation subject to adjustment of depreciation of 10% on reducing balance method.
- For the purpose of calculating Goodwill the company decided that the years ending 31.03.2020 and 31.03.2021 be weighted as 1 each (being COVID affected) and for year ending 31.03.2022 and 31.03.2023 weights be taken as 2 and 3 respectively.
Goodwill is to be valued on the basis of 2 years purchases of last 5 years average profit. The profits and losses of last five years were as follows :
| Year | 1 | 2 | 3 | 4 | 5 |
| Amount (₹) | 30,000 (Profit) |
40,000 (Profit) |
70,000 (Profit) |
30,000 (Loss) |
50,000 (Profit) |
Find out value of Goodwill.
