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प्रश्न
X and Y are partners with capitals of ₹ 50,000 each. They admit Z as a partner for 1/4th share in the profits of the firm. Z brings in ₹ 80,000 as his share of capital. The Profit and Loss Account showed a credit balance of ₹ 40,000 as on date of admission of Z.
Give necessary journal entries to record the goodwill.
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उत्तर
Total Capital of the firm on the basis of Z's admission = ₹ 80,000 × `4/1` = ₹ 3,20,000
Actual capital of all the partners = X's capital + Y’s Capital + Z’s Capital + Undistributed Profit
= ₹ 50,000 + ₹ 50,000 + ₹ 80,000 + ₹ 40,000
= ₹ 2,20,000
Goodwill = Total Capital of the firm - Actual Capital of the firm
= ₹ 3,20,000 - ₹ 2,20,000
= ₹ 1,00,000
Z’s share of goodwill = ₹ 1,00,000 × `1/4` = ₹ 25,000
W.N. Calculation of Sacrificing Ratio:
Old Ratio = 1: 1 or `1/2: 1/2`
Z's share = `1/4`
Let total profit = 1
Remaining Profit = `1/1 - 1/4 = (4 - 1)/4 = 3/4`
New Ratio = Old Ratio × Remaining Profit
X = `1/2 xx 3/4 = 3/8`
Y = `1/2 xx 3/4 = 3/8`
Z = `1/4 or 2/8`
New Ratio = `3/8: 3/8: 2/8` or 3: 3: 2
Sacrifice Ratio = Old Ratio - New Ratio
X = `1/2 - 3/8 = (4 - 3)/8 = 1/8`
Y = `1/2 - 3/8 = (4 - 3)/8 = 1/8`
Sacrifice Ratio = `1/8: 1/8 or 1: 1.`
| Journal Entries | ||||
| Date | Particular | L.F. | Amt (₹) | Amt (₹) |
| 1. | Cash/Bank a/c Dr. | 80,000 | ||
| To Z's Capital a/c | 80,000 | |||
| (Being capital brought in by Z) | ||||
| 2. | Z's Capital a/c Dr. | 25,000 | ||
| To X's Capital a/c |
12,500 |
|||
| To Y's Capital a/c | 12,500 | |||
| (Being Z's share of goodwill distributed among the partners in the ratio of 1: 1) | ||||
APPEARS IN
संबंधित प्रश्न
Vivek, Viney and Vijay were partners in a firm sharing profits in the ratio of 2:1:2. The firm closes its books on 31st March every year. On 31-12-2014 Viney died. On that date his capital account showed a debit balance of Rs 10,000 and Goodwill of the firm was valued at Rs 2, 40,000. There was a debit balance of Rs 7,000 in the profit and loss account. Viney's share of profit in the year of his death will be calculated on the basis of average profit of last 5 years which was Rs 90,000.
Pass necessary journal entries in the books of the firm on Viney's death.
Kumar, Gupta and Kavita were partners in the firm sharing profits and losses equally. The firm was engaged in the storage and distribution of canned juice and its godowns were located at three different places in the city. Each godown was being managed individually by Kumar, Gupta and Kavita. Because of increase in business activities at the godown managed by Gupta, he had devoted more time. Gupta demanded that his share in the profits of the firm be increased, to which Kumar and Kavita agreed. The new profit sharing ratio was agreed to be 1: 2: 1. For this purpose, the goodwill of the firm was valued at two years purchase of the average profits of last five years. The profits of the last five years were as follows :
| Years |
Profit Rs |
|
| I | 4,00,000 | |
| II | 4,80,000 | |
| II | 7,33,000 | |
| IV | Loss | 33,000 |
| V | 2,20,000 |
You are required to:
1) Calculate the goodwill of the firm
2) Pass necessary Journal Entry for the treatment of goodwill on the change in profit sharing ratio of Kumar, Gupta and Kavita.
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.
For which share of Goodwill a partner is entitled at the time of his retirement?
How does the nature of business affect the value of goodwill of a firm?
State 'True' or 'False'
When goodwill is paid privately, no entry in the books of account is required.
State 'True' or 'False'
The goodwill brought in by a new partner is shared by the old partners.
State ‘True’ or ‘False’:
If the goodwill account raised up, goodwill account is debited.
Aparna, Manisha and Sonia are partners sharing profits in the ratio of 3:2:1. Manisha retires and goodwill of the firm is valued at Rs 1,80,000. Aparna and Sonia decided to share future in the ratio of 3:2. Pass necessary Journal entries.
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.
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.
When goodwill is withdrawn by the partner ________ account is credited.
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.
A new partner always bring his share of goodwill in cash.
Find the Odd one.
What is the super profit method of calculation of goodwill?
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 _____________.
In the absence of partnership deed, interest on capital and drawing to be:
Amount of old goodwill already appearing in the books will be written off:
When there is no Goodwill Account in the books and goodwill is raised, ____________ account will be debited.
The amount of goodwill is paid by the new partner:
Gini, Bini and Mini were in partnership sharing profits and losses in the ratio of 5:2:2. Their Balance Sheet as at 31st March, 2021 was as follows:
| Balance Sheet as at 31st March,2021 | |||||
| Liabilities | Amount (₹) | Assets | Amount (₹) | ||
| Sundry Creditors | 56,500 | Cash | 1,17,300 | ||
| Bank Overdraft | 61,500 | Debtors | 38,000 | ||
| Workmen’s Compensation Reserve | 32,000 | Less: Provision For Doubtful Debts | (2,300) | 35,700 | |
| Capitals: | Inventories | 1,34,000 | |||
| Gini | 4,60,000 | Machinery | 1,00,000 | ||
| Bini | 3,00,000 | Furniture | 1,80,000 | ||
| Mini | 2,90,000 | 10,50,000 | Building | 5,70,000 | |
| Goodwill | 63,000 | ||||
| 12,00,000 | 12,00,000 | ||||
On 31st March, 2021, Gini retired from the firm. All the partners agreed to revalue the assets and liabilities on the following basis:
- Bad debts amounted to ₹ 5,000. A provision for doubtful debts was to be maintained at 10% on debtors.
- Partners have decided to write off existing goodwill.
- Goodwill of the firm was valued at ₹ 54,000 and be adjusted into the Capital Accounts of Bini and Mini, who will share profits in future in the ratio of 5:4.
- The assets and liabilities valued as: Inventories ₹1,30,000; Machinery ₹ 82,000; Furniture ₹1,95,000 and Building ₹ 6,00,000.
- Liability of ₹23,000 is to be created on account of Claim for Workmen Compensation.
- There was an unrecorded investment in shares of ₹ 25,000. It was decided to pay off Gini by giving her unrecorded investment in full settlement of her part payment of ₹ 28,000 and remaining amount after two months.
Prepare Revaluation Account and Partners’ Capital Accounts as on 31st March, 2021.
When the new partner is admitted goodwill can be treated in how many ways?
Hem and Nern are partners in firm sharing profits in the ratio of 3:2. Their capitals were Rs. 80,000 and Rs. 50,000 respectively. They admitted Sam on Jan. 1 2019 as a new partner for 1/5 share in the future profits. Sam brought Rs. 60,000 as his capital. Calculate the value of goodwill of the firm.
What would be the journal entry for revaluation of an increase in the value of an asset?
What would be the journal entry for revaluation of an increase in the value of a liability?
Goodwill is a/an ______ asset.
When the incoming partner brings his share of premium for goodwill in cash, it is adjusted by crediting to ______.
When the value of goodwill is not specified at the time of admission of a partner is called ______.
Identify the formula for calculating goodwill with the help of capitalised method of super profit.
Manas and Mili are partners in a firm sharing profits in the ratio of 3 : 2. Anita is admitted as a new partner for `1/4`th share in future profits. Capitals of Manas and Mili were ₹ 3,00,000 and ₹ 1,50,000 respectively. Anita brought ₹ 2,00,000 as her capital. The value of goodwill of the firm on Anita's admission.
G, S and T were partners sharing profits in the ratio 3:2:1. G retired and his dues towards the firm including Capital balance, Accumulated profits and losses share, Revaluation Gain amounted to ₹ 5,80,000. G was being paid ₹ 7,00,000 in full settlement. For giving that additional amount of ₹ 1,20,000, S was debited for ₹ 40,000. Determine goodwill of the firm.
Find out super profit, if capital employed is ₹ 4,00,000, normal rate of return is 12% and average profit is ₹ 60,000.
