मराठी

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. - Accountancy

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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.

रोजकीर्द नोंद
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उत्तर

Journal

Date Particulars L.F.

Dr.

Rs

Cr.

Rs

 

Vivek’s Capital A/c                                                               Dr

Vijay’s Capital A/c                                                                Dr

           To Viney’s Capital A/c

(Being goodwill adjusted in gaining ratio)

Vivek’s Capital A/c                                                               Dr

Viney’s Capital A/c                                                               Dr

Vijay’s Capital A/c                                                                Dr

         To Profit and Loss A/c

(Being debit balance in P&L A/c written-off among all partners
in old ratio)

Profit and Loss Suspense A/c                                           Dr

       To Viney’s Capital A/c

(Being Viney’s share of profit up to date of death dispensed
through P&L Suspense A/c)

Viney’s Capital A/c                                                          Dr

      To Viney’s Executor A/c

(Being amount due to Viney transferred to his executor’s A/c)

 

24,000

24,000

 

 

2,800

1,400

2,800

 

 

 

13,500

 

 

50,100

 

 

 

 

48,000

 

 

 

 

7,000

 

 

 

13,500

 

 

50,100

 

Woring Notes :

WN:1 = Calculation of Viney's Share of Goodwill

Viney's Share of Goodwill = Firm's Goodwill x His Profit Share

`=240000xx1/5=48000`

Rs 48, 000 will be borne by gaining partners in gaining ratio.

It is assumed that continuing partners gain in their old profit sharing ratio of 2:2.

Vivek's gain `=48000xx2/4=24000`

Vijay's gain `=48000xx2/4=24000`

WN 2 : Calculation of Share of Debit balance in P&L A/c

Vivek's share `=7000xx2/5=2800`

Viney's share `=7000xx1/5=1400`

Vijay's share `=7000xx2/5=2800`

WN 3 : Calculation of Share in Profit (earned during the year)

Viney's share = Average Profits x Number of Months Viney Remained x Her Profit Share

`=90000xx9/12xx1/5=13500`

WN4 : Calculation of Amount transferred to Viney's Executor A/c

Amount due to Viney = Capital + Credit items - Debit Items

= (10,000) + 48,000 - 1,400 + 13500 = 50100.

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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.


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:

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Rs

Assets

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Rs

Creditors

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Capitals

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Bills payable

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(c) Interest @12% per annum on the credit balance, if any, in his Capital account.
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Prepare Agarwal's Capital Account to be presented to his executors.


Select the most appropriate answer from the alternative given below and rewrite the sentence.

When goodwill is withdrawn by old partners ________________ a/c is credited.


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 the new partner is shared by all partners.


State ‘True’ or ‘False’:

If the goodwill account raised up, goodwill account is debited.


State 'True' or 'False'
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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 ?


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Anil and Sunil are partners in a firm with fixed capitals of ₹ 3,20,000 and ₹ 2,40,000 respectively. They admitted Charu as a new partner for 1/4th share in the profits of the firm on 1st April, 2012. Charu brought ₹ 3,20,000 as her share of capital.
Calculate value of goodwill and record necessary Journal entries.


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Hints:

  1. Goodwill of ₹ 18,000 written off by A and B in 2 : 1.
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State True or False with reason.

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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
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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:

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  2. Partners have decided to write off existing goodwill.
  3. 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.
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  5. Liability of ₹23,000 is to be created on account of Claim for Workmen Compensation.
  6. 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.


Which method is followed when the new partner does not bring in his share of goodwill in cash.


What would be the journal entry for if goodwill is raised at full value and retained in books?


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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
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  2. 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.

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:

  1. Goodwill of the firm to be valued at two years’ purchase of the average profits of the last three years.
  2. Danish to have a `1/4` share in the future profits.
  3. 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:

  1. The formula to calculate goodwill by the Average Profit Method.
  2. The value of self-generated goodwill of the firm.
  3. Danish’s capital contribution.

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