Question

40. Madan and Gopal are partners sharing profits in the ratio of 3:2. They admit Sooraj for 1/3rd
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.​

Answer 1

Goodwill is not to be raised and written off; and  Goodwill is to be raised and written off.​

Explanation:

A)  Suraj,s capitals A/c are Rs.

1,50,000.

Cr. to Mohan capitals is 1,20,000 and Gopal capitals is A/c Rs. 30,000 which is <br>.

B). Dr. Suraj goodwill account is 4,50,000 Rs.

Cr. Madan capital accounts Rs. 1,20,000 and in Gopal capital account Rs. 1,80,000<br>

Dr. Mohan capital account Rs. 1,50,000,

Gopal capital account is 1,50,000

Suraj capital account is 1,50,000.

Cr. goodwill account with s. 4,50,000

Learn more: Goodwill, accounts.

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Answer 2

Explanation:

Given 40. Madan and Gopal are partners sharing profits in the ratio of 3:2. They admit Sooraj for 1/3rd 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.​

So we have  

Working note 1  calculation of sacrificing ratio

         So old ratio = 3 : 2 or 3/5 : 2/5

 So new Ratio = 1 : 1 : 1 or 1/3 : 1/3 : 1/3

So sacrificing ratio is old Ratio – New Ratio

Now Madan = 3/5 – 1/3  

                    = 9 – 5 / 15

                   = 4/15

So Gopal = 2/5 – 1/3

                = 6 – 5 / 15

                = 1/15

So Sacrifice Ratio = 4/15 : 1/15

                                                                   JOURNAL

Date              Particulars                        L.F                                  Dr                    Cr

            Sooraj’s Capital A/C(1/3 of 550000 – 100000)     1,50,000

           To Madan’s Capital A/C(4/15 of 4,50,000                                         1,20,000

           To Gopal’s Capital A/C (1/15 of 4,50,000)                                           30,000

      (Good will not raised and write -off in Sacrificing Ratio)

   Good will A/C (5,50,000 – 1,00,000)                                       4,50,000

    To Madan’s Capital A/C (3/5 of 4,50,000)                                                   2,70,000

       to Gopal Capital A/C (2/5 of 4,50,000)                                                      1,80,000

(Good will raised in the books of firm)

  Madan’s Capital A/C                                      Dr      1,50,000

  Gopal’s Capital A/C                                        Dr      1,50,000

  Sooraj’s Capital A/C                                        Dr     1,50,000

            To Good will A/C                                                               4,50,000                                                                    

(Entry passed to write off the amount of

Good will in the new profit sharing ratio)    

Reference link will be

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