45. Aman commented business with a capital of 250000 on 1st An, 2015. During the five you
31st March, 2020 , the following profits and losses were made
31st March, 2016 - - Loss 5000
31st March, 2019. Profit 20000
31 March, 2017 - Profit? 13000
31st March, 2020 Profit 25.000
31st March, 2018 - Profit 17000
During this period he had draw 40.000 for his personal use. On 1st April, 2020, he admin
into partnership on the following terms
Boman to bring for his half share in the business, capital equal to Amar's Capital on 31 March 2019
and to pay for the one half share of goodwill of the business, on the basis of three times there
profit of the last five years. Prepare the statement showing what amount Boman should invest to bene
a partner and pass entries to record the transactions relating to admission
Answers
Answer:
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Explanation:
answer
During the five years ended 31^st March,2018, the following profits and losses were made: 31 ^st March,2014 = Loss Rs. 5000 31^st March, 2015 = Profit ... Add: Profit on 31st March, 2016
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12th
Accountancy
Reconstitution of a Partnership Firm - Admission of a Partner
Accounting Treatment of Accumulated Profits and Losses and Reserves
Mr. A commenced business wi...
ACCOUNTANCY
Mr. A commenced business with a capital Rs.2,50,000 on 1
st
April,2013. During the five years ended 31
st
March,2018, the following profits and losses were made:
31
st
March,2014 = Loss Rs.5,000
31
st
March,2015 = Profit Rs.13,000
31
st
March,2016 = Profit Rs.17,000
31
st
March,2017 = Profit Rs.20,000
31
st
March,2018 = Profit Rs.25,000
During this period he had drawn Rs.40,000 for his personal use. On 1
st
April,2018, he admitted B into partnership on the following terms:
B to bring for his half share in the business, capital equal to A
′
s Capital on 31
st
March,2018 and to pay for the one-half share of goodwill of the business, on the basis of three times the average profit of the last five years. Prepare the statement showing what amount B should invest to become a partner and pass entries to record the transaction relating to admission.
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ANSWER
Capital as on April,1 2013
Less: Loss on 31st March, 2014
Add: Profit on 31st March, 2015
Add: Profit on 31st March, 2016
Add: Profit on 31st March, 2017
Add: Profit on 31st March, 2018
250000
(5000)
13000
17000
20000
25000
Less: Drawings 320000
(40000)
Capital as on March 31st, 2018 280000
Calculation of Goodwill:
Average profit= [-5000+13000+17000+20000+25000]/5
= 14000
Goodwill= 14000 * 3
= 42000
B's share of Goodwill= 42000 * 1/2= 21000
B's Capital= A's Capital= 280000
JOURNAL
1. Cash a/c..... Dr. 301000
To B's Capital a/c 280000
To Premium for Goodwill a/c 21000
(Being capital and premium for goodwill brought in by B)
2. Premium for Goodwill a/c... Dr. 21000
To A's Capital a/c 21000
(Being premium for goodwill transferred to A's Capital account)