Advertisements
Advertisements
प्रश्न
Mohan and Sohan were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted Ram for 1/4th share on 1st April, 2019. It was agreed that goodwill of the firm will be valued at 3 years' purchase of the average profit of last 4 years ended 31st March, were ₹ 50,000 for 2015-16, ₹ 60,000 for 2016-17, ₹ 90,000 for 2017-18 and ₹ 70,000 for 2018-19. Ram did not bring his share of goodwill premium in cash. Record the necessary Journal entries in the books of the firm on Ram's admission when:
(a) Goodwill appears in the books at ₹ 2,02,500.
(b) Goodwill appears in the books at ₹ 2,500.
(c) Goodwill appears in the books at ₹ 2,05,000.
Advertisements
उत्तर
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
|
|
2019 |
Mohan’s Capital A/c |
|
|
|
|
|
|
Sohan’s Capital A/c |
Dr. |
81,000 |
|
|
|
|
To Goodwill A/c |
|
|
2,02,500 |
|
|
|
(Old goodwill written-off in old ratio) |
|
|
|
|
|
|
|
|
|
||
|
|
Ram’s Capital A/c |
Dr. |
50,625 |
|
|
|
|
To Mohan’s Capital A/c |
|
|
30,375 |
|
|
|
To Sohan’s Capital A/c |
|
|
20,250 |
|
|
|
(Premium not brought debited to Ram and credited to sacrificing partners) |
|
|
|
|
|
|
|
|
|
||
|
|
Mohan’s Capital A/c |
Dr. |
1,500 |
|
|
|
|
Sohan’s Capital A/c |
Dr. |
1,000 |
|
|
|
|
To Goodwill A/c |
|
|
2,500 |
|
|
|
(Old goodwill written-off in old ratio) |
|
|
|
|
|
|
|
|
|
||
|
|
Ram’s Capital A/c |
Dr. |
50,625 |
|
|
|
|
To Mohan’s Capital A/c |
|
|
30,375 |
|
|
|
To Sohan’s Capital A/c |
|
|
20,250 |
|
|
|
(Premium not brought debited to Ram and credited to sacrificing partners) |
|
|
|
|
|
|
|
|
|
||
|
|
Mohan’s Capital A/c |
Dr. |
1,23,000 |
|
|
|
|
Sohan’s Capital A/c |
Dr. |
82,000 |
|
|
|
|
To Goodwill A/c |
|
|
2,05,00 |
|
|
|
(Old goodwill written-off in old ratio) |
|
|
|
|
|
|
|
|
|
||
|
|
Ram’s Capital A/c |
Dr. |
50,625 |
|
|
|
|
To Mohan’s Capital A/c |
|
|
30,375 |
|
|
|
To Sohan’s Capital A/c |
|
|
20,250 |
|
|
|
(Premium not brought debited to Ram and credited to sacrificing partners) |
|
|
|
|
Working Notes:
WN1: Calculation of Goodwill
Note: Since no information is given about the share of sacrifice, it is assumed that the old partners are sacrificing in their old profit sharing ratio.
APPEARS IN
संबंधित प्रश्न
Vikas, Vishal and Vaibhav were partners in a firm sharing profits in the ratio of 2:2:1. The firm closes its books 31st March every year. On 31-12-2015 Vaibhav died. On that date his Capital account showed a credit balance of Rs. 3, 80,000 and Goodwill of the firm was valued at 1, 20,000. There was a debit balance of Rs. 50,000 in the profit and loss account. Vaibhav's share of profit in the year of his death was to be calculated on the basis of the average profit of last five years. The average profit of last five years was Rs. 75,000.
Pass necessary journal entries in the books of the firm on Vaibhav's death.
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.
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.
Explain the treatment of goodwill at the time of retirement or on the event of death of a partner?
Explain how will you deal with goodwill when new partner is not in a position to bring his share of goodwill in cash ?
A and B are partners in a firm with capital of ₹ 60,000 and ₹ 1,20,000 respectively. They decide to admit C into the partnership for 1/4th share in the future profits. C is to bring in a sum of ₹ 70,000 as his capital. Calculate amount of goodwill.
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.
Vinay and Naman are partners sharing profits in the ratio of 4 : 1. Their capitals were ₹ 90,000 and ₹ 70,000 respectively. They admitted Prateek for 1/3 share in the profits. Prateek brought ₹ 1,00,000 as his capital. Calculate the value of firm's goodwill.
Write a word/phrase/term which can substitute the following statement.
Method under which calculation of goodwill is done on the basis of extra profit earned above the normal profit.
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.
What is the super profit method of calculation of goodwill?
In the absence of partnership deed, interest on capital and drawing to be:
Value of reputation of the firm is:
____________ profit is excess of actual profits over normal profits.
Old partnership will dissolve if:
When there is no Goodwill Account in the books and goodwill is raised, ____________ account will be debited.
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.
What would be the journal entry for revaluation of an increase in the value of an asset?
Excess value of Purchase Consideration over Net Assets at the time of purchase of business is credited to:
Analyse the case given below and answer the question that follow:
Alia, Karan and Shilpa were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Goodwill appeared in their books at the value of ₹ 60,000. Karan decided to retire from the firm. On the date of his retirement, goodwill of the firm was valued at ₹ 2,40,000. The new profit sharing ratio decided among Alia and Shilpa was 2 : 3. Give the answer to the question given below:
What amount of goodwill will be transferred to Karan's Capital account?
Chaman, Raman, and Suman are partners sharing profits in the ratio of 5:3:2. Raman retires. The new profit-sharing ratio between Chaman and Suman will be 1:1. The goodwill of the firm is valued at ₹1,00,000. Raman's share of goodwill will be adjusted.
Mohit and Govind were partners in a firm with a ratio of 1:2. They admitted Ravi for 1/5th share in profits. He brought ₹2,50,000 for capital but could not bring goodwill. The goodwill of the firm was valued at ₹3,00,000. What Journal Entry will be passed for the treatment of goodwill?
How is Goodwill of the firm created?
Fill in the blank.
______ = `("Total Profit")/("Number of Years")`
Find out super profit, if capital employed is ₹ 4,00,000, normal rate of return is 12% and average profit is ₹ 60,000.
On 1st April, 2020, Anish started a business with a capital of ₹ 3,00,000.
During the three years ending 31st March, 2023, the results of his business were:
| Year | (₹) | |
| 2020-21 | Loss | 20,000 |
| 2021-22 | Profit | 34,000 |
| 2022-23 | Profit | 46,000 |
From the year 2020-21 to the year 2022-23, Anish withdrew ₹ 30,000 from the firm for his personal use.
On 1st April, 2023, he admitted Danish into partnership on the following terms:
- Goodwill of the firm to be valued at two years’ purchase of the average profits of the last three years.
- Danish to have a `1/4` share in the future profits.
- Danish’s capital is to be equal to `1/4` of Anish’s capital determined on 1st April, 2023, after the goodwill compensation has been taken into account.
You are required to give:
- The formula to calculate goodwill by the Average Profit Method.
- The value of self-generated goodwill of the firm.
- Danish’s capital contribution.
Choose the components required to calculate goodwill of a firm by capitalisation of average profits method.
P: The normal profits of a similar firm in the industry.
Q: The average profits of the firm.
R: The number of years purchase.
S: The actual capital employed in the business.
Aman and Vinod are partners in a firm. Their Balance Sheet showed:
Gross Debtors: ₹ 1,52,000
Provision for doubtful debts: ₹ 1,000
On Milin’s admission as a new partner, the assets and liabilities are to be revalued as:
- Unaccounted accrued income of ₹ 10,000 to be provided for.
- Bills Payable of ₹ 10,000 which were recorded, to be discharged at a rebate of 10%.
- Debtors of ₹ 2,000 to be irrecoverable.
- Provision for doubtful debts to be provided @ 2% of the debtors.
What is the net effect of revaluation of assets and liabilities?
